I've participated in Social websites for a number of years.MySpace used to be the main site for me and I refused to try Facebook. Then (man inspired, of course, lol) I tried Facebook and absolutely loved it.
Growing up I was a PK (preacher's kid) and my Dad started churches. We lived in a number of different places and over the years I learned that I would lose friends constantly and just accepted it. Within two or three weeks of joining Facebook I had a large number of these lost friends back in my life even if it's only a digital connection.
It's enriching for me on a personal level and I recently added a page for Vision Tech Publishing, my freelance publishing company. Just this week I started a Facebook ad campaign (Yes, it works much like Google Adsense). I'm not sure yet how successful the ad will be but the fact that I could set a daily limit made it worth a try.
As far as Facebook making the web smaller, I don't know that I agree. The ability to click through to numerous interesting topics posted by friends has led me to discover sites and articles, blogs, etc that I'd have never read or encountered otherwise.
Just the humble opinion of a newcomer