Why bother with encryption when each person having an email list would work as well as anything for distributing information? Why? It's like UPS buying armored cars to deliver your packages with but still plunking the package down outside your house when you're not home.
I have a reasonable expectation of privacy sending email through a webmail account. If I was sending the corporate crown-jewels or something, I'd encrypt my message but email these days is appropriately secure.
I'm asking these questions with the best intentions too. I like the idea of a Facebook alternative - I'm working on my project along those lines in fact. The thing is that to offer an alternative, you've got to be clear what services Facebook offers and how one could offer them better. It seems like a lot of upset over Facebook confuses Facebook's abuse of user data with the inherent insecurity that comes from sharing information with any group of people. We'll have to educate ourselves and our users about the difference if we want to have this Facebook alternative thing get off the ground.
As far as I can tell, almost everything Facebook provides is something you can do with the "regular web". Facebook simply puts everything in a nice package (and that nice package matters a lot as we've seen). If you had a script which aggregated your friend's blogs, tweets and emails, you would have something like Facebook. The only service that would be required is friend-discovery and perhaps a "like" messaging system. The rest could just involve wrapping/packaging existing stuff.
The thing about Facebook and walled-gardens in general is that they really entice people who otherwise wouldn't participate in "cyber life" to come onto the web. But Facebook users hopefully will also be learning that their walled-garden doesn't offer the protection it claims and hopefully they'll realize that nothing can simultaneously offer free-sharing and perfect privacy in the modern era - your friends' friends just aren't necessarily going to be your friends etc.
So we "Facebook alternativists" have to offer something that gives the good stuff that a social network can realistically provide for people who are over the illusion that they can live in a one-identity, total-trust world.
There's a difference between privacy and trust. Software can't predict when your best friend is going to turn against you for emotional or social reasons.
If you share something with ten friends, and one of them betrays your trust, technology can't predict or prevent that.
However, if you share something with ten friends, and they all act properly and trustworthy, you have a reasonable expectation that your data won't be available to anybody but those ten friends.