Allfacebook.com just posted an excellent article about tweaking your Facebook profile privacy settings.
Their tips are clear, helpful, and easy to apply. More importantly, they can save you a lot of embarrassment. Their best suggestion IMHO is using Friends Lists. The Friends List is a fairly new Facebook feature that gives you fine-grained privacy controls. I have a friend list for each of my circles of friends, and it saves me a ton of time scanning updates. Most people I know don’t use Friend Lists because it seems a little daunting at first glance, but it’s actually very intuitve and easy to use. Play with it for five minutes and you’ll have it figured, no problem.