In Canada, Facebook has been in front of the courts numerous times for privacy issues that are okay in the US and some other countries but not most. They were given a list of issues to fix and did come through with some but not all. The Supreme Court basically said they weren't joking and would shut down Canadian access if they didn't comply, I think they have finally met most demands though I think they still have time for others.

It was mainly issues related to not being able to opt in or out of info being shared with partner sites, which is a no no here. Hopefully these settings are now available for all users, not just Canadians, so you can see what is being shared with whom and decide for yourself whether you wish to allow if disallow it.

As for reading the wife's page, everyone has the ability to control what is posted to their page, what updates they see etc. If you don't want to know when someone has posted a picture of a cat doing something amusingly stupid, you don't have to see it. If you don't want to know every time a friends takes a dump and names it, you don't have to.
You can set it up so you don't get any updates on other people at all, but can still view their pages and profile as a friend if you want to see what they have been up to.

You do get pretty good control over what is displayed on your own Facebook page, what is shared with others, who can see your page and info/updates etc.

It's up to you what you tell people about yourself, other people just think their lives are so interesting and that, because its a big Internet site, Facebook wouldn't do anything harmful. Let them know what little they do, you can still lock down your page and only share what you want to.