I think at the time you add a friend you get a pulldown menu of friend groups that you have set up. If you don’t specify one, the friend goes into your public group, mimicking the current behaviour.

In the permissions for each group, you get a list of all the other groups including public. You then select the ones you want visible to each other, and if anyone from one of those groups views your friends list / wall / etc they only see stuff that came from those groups it is allowed to see.

I’ve always had misgivings about who to friend on facebook, especially when it comes to co-workers.

I usually end up putting my co-workings on my limited profile and don’t give them access to anything beyond my profile pic, my employment history, a few photo galleries and my contact info, which pretty much invalidates their access to me via the Facebook network.

Yet, on the other hand, I have “friends” on Facebook like Rob Scoble and Jeremiah Owyang, who I’ve never met. But they get total access to my profiles for precisely the same reason. They have no connection to me beyond the fact that I’m interested in what they have to say and occasionally want to connect with them.

But in the end, Facebook is generally very good at granular privacy and will figure this out, I think. Especially with all the talk about this since they opened their doors to people outside of college.

1. Personal Friend
2. Colleague
3. Acquaintance

Each category needs its own privacy settings, and you should be able to apply any or all of the three to a given friend.

It might be nice to have even more nuance, but I agree — you don’t want to make things any more complicated than absolutely necessary.

And finally there are those how don’t even use FB to organize their (private or business) relationships but take it as a simple marketing tool for self promotion…