They don't have to go anywhere. Most communication will continue to happen through gossip, as it should.
Facebook is stupid because it has become a social obligation to "friend" people on it, and like you pointed out, way too hard to set up effective privacy measures.
My english professor this semester has this crusade against facebook. There have been very few classes go by where he doesn't connect what we're reading about with how facebook is causing the decline of civilization.
