Facebook has just announced MAJOR changes to how you control what people see:
Today we’re announcing a bunch of improvements that make it easier to share posts, photos, tags and other content with exactly the people you want. You have told us that “who can see this?” could be clearer across Facebook, so we have made changes to make this more visual and straightforward. The main change is moving most of your controls from a settings page to being inline, right next to the posts, photos and tags they affect. Plus there are several other updates here that will make it easier to understand who can see your stuff (or your friends’) in any context. Here’s what’s coming up, organized around two areas: what shows up on your profile, and what happens when you share something new.
via Facebook Blog.