I've had this article on my hot list for a while. In Human Scale, Neighborhoods, and MySpaceaphobia Stowe Boyd writes well about some of the issues with online sites like MySpace or Facebook and even proposes some solutions to the problems they have.
Human-oriented social contexts should allow users to control scale: how many people can access what aspects of my on-line persona, what sorts of communication are available based on what degree of connection, and so on. If I want to limit my profile on Facebook to only current students of my university, I should be able to do so. If I want to rectrict access to my music playing habits to only those people that I know, then Last.fm should allow me to.