Facebook phone rumors resurface: cloud-based, HTC-built?
engadget.com
engadget.com
To answer your second question, most people don't care about privacy as much as geeks do. In fact, most people don't care about privacy at all. Though it's tempting to say, "they're all just morons and they'll see soon enough," it's probably also partially the case that we (as geeks) are a little paranoid ourselves. At least that's what comes to mine when I hit someone's home page and see a PGP public key.
Disclaimer: I will eventually be employed there, but it's not like I have any sort of a clue as to whether this is real or not.
http://www.engadget.com/2011/01/17/disney-to-sell-android-ph...
HTC, Foxconn, and Samsung will build it with your logo on the back; Google will provide the OS updates; and you just need to provide the value add like integration with a popular service whether that's Facebook, MTV, or Disney. Even Barnes and Noble was able to make a nice Android device with its own App Store.
Such a venture could easily pay for itself like Google's Chrome and Android projects did. It's a tough call. No matter what Facebook is reliant on Google and Apple for its mobile future. Then again the easiest path for Facebook (i.e. Android) also ties them even more closely to Google's whims.
Android? Windows X?
Android would be awesome but that would be conceding too much to google.