You know how in the lifecycle of a political campaign, candidates speak mostly to their base, say whatever is necessary to get through the primaries, then course correct somewhere around the center as the general election campaign begins? You could view Facebook's explosive growth in a similar way with respect to the timeline of changes to their privacy policies.
Facebook started out as a university student site, pretty locked down privacy wise. Each time they became less restrictive, be it allowing in non-college students, using profiles to attract outsiders into the service, etc., they grew exponentially. The timing of policy changes probably contributed as much to the success of Facebook as the utility of the site.
The last batch of controversial default privacy settings, biased towards exposing user information in ways they may not understand caused quite an uproar, at least in some circles. Facebook responded by changing certain aspects of it's privacy defaults and opt in/out settings. It seems going forward that there will need to be finely timed thrusts towards growth friendly privacy policies, knowing that there will be backtracking in response to user complaints. At the end of each cycle, they will end up with more control & access than the last move. Touchpoints of innovation will have to outweigh privacy concerns for enough of the people enough of the time.