To be more specific: what the hell makes it onto my news feed, and how? If I click this button, will it be broadcast to the world? I (and a few friends) were concerned when their use of the "Find a Friend" feature was openly touted on Facebook on my feed (e.g. "Mike found Bob through Friend Finder!") - where no notice was given.
People realize that whatever they post on their status, Walls, etc, are essentially public knowledge. But they do not expect simple clicks to be broadcast to the world (potential e.g., "Mike viewed Jane's profile 20 times this week!")... and while we'd like to think Facebook is smart enough to tiptoe around these use cases, evidence suggests they are not.
Where Twitter is public by nature, Facebook is really inconsistent and doesn't give a clear message.
Consumer opinion isn't often about root causes, but the most visible issues.
The average person might not know much about how privacy leaks happen and they might be willing to assume this or that thing they do is private, even without any evidence. But the average person is mortified at the prospect of their private business going out to the world at large. "The Internet" is a bugaboo to many, many people with privacy violation being a part of that bugaboo. This same dark, nameless fear is starting to rub-off on Facebook.
That said, I would agree that the other compulsive aspects of Facebook you mention probably also are factors. And the two factors work together rather than being dichotomies. A person may feel a need to have "friends" but simultaneous fear of sharing their information given the possibilities that it could go "anywhere".
Twenty years or more, I saw a Sci-Fi which described a future in which people had to pay not to be connected to the net.
I'd agree that the ads probably aren't a big factor though.