
I think it's pretty clear why people may have concerns...
From a privacy perspective, in a way FB has done people a service. They have made blatant and obvious, and in a manner people can understand, the true power and danger of digital communication. Namely, every thing we do, at the finest level of detail, can in principal be monitored. Activity details can be stored indefinitely, processed, data mined, aggregated and sold. It's a good thing that people are being made aware of this fact.
There are also concerns about data overload, and how activity streams will eventually (and may already) hit a signal-to-noise ratio so low as to be useless. I have to disagree. Or at least I have to say that it is way too early to make this kind of conclusion. In fact, if managed correctly, such an advancement could have beneficial effects not only for the usefulness of sharing online but also benefits for user privacy. Of course the crucial phrase here is "managed correctly."
Taken to its logical conclusion, Facebook is in a position to own two valuable assets: 1. the social graph (that is, identity and association), and 2. user activity streams. At this point users MAY (depending on the pleasure and behest of M. Zuckerberg) be given two types of "curation" tools: a. the ability to manage data streams produced by their on-line activity, and b. the ability to manage data streams of others that they consume. It is also quite possible that FB simply expose these two types of assets to 3rd party developers, which can in turn provide tools for managing these data streams (aka "activity streams".) Of course FB will maintain control, and if there is some risk to their business, can and will rollback access as they see fit.
If nothing else, this presents non-trivial problems in balancing flexibility with simplicity. No doubt users will have to be exposed gradually to these types of services. It's quite possible that FB moved too quickly here, but they have shown every ability to correct and adjust as necessary.
A further complication involves content providers (such as media companies, music sharing sites, etc.) Over time users will develop (potentially complex) control and privacy relationships with a proliferation of content providers, creating a fractured privacy environment, which creates further risk for the user.
No doubt FB is struggling with these many issues as we speak. The recent media attention has almost certainly sent the signal that they may have over-stepped here or moved too quickly. It would be nice to imagine that this will signal a weakening of FB's dominance over these valuable assets, and that we may enter an era where consumers wake up to the value these assets present and the danger of one commercial interest obtaining a monopoly over them. And in turn the rise of more open alternatives...