It's also not so good for the visually impaired because you can't really provide an audio version of the challenge, whereas identifying the letters in a random string is easier to present as audio.
A real person would instantly recognize one of their friends and even the guy getting paid to solve captchas would have a hard time.
Of course, you then have the problem of getting someone to connect FB to the CAPTCHA service for the first time instead of abandoning the form.