Do we really think that Heads have nothing better to do all day than trawl through Facebook looking for compromising pictures of their staff?
Well I certainly would in some cases but in others I'd just print them off and hang them in my window to frighten off burglars.
Whilst I have doubts about how true some of these reports are, I do think that many people are extremely naive when they publish pictures and details of their private life on the internet (once they are on they are pretty much there for good and can still be found a long time after you remove them). I sometimes forget that if you are under 25, you probably barely remember a time without the internet, so its familiarity brings a certain openness and nonchalance, without all the suspicions that cynical old gits like me have.
The other problem of course, is that you can be 'tagged' in a photograph that was taken and posted by someone else without your knowledge. A simple search can then find these pictures.
I've no idea how effective 'privacy settings' are, but I think I'd find out if I were a regular Facebook user.