From Dark Patterns
"The act of creating deliberately confusing jargon and user-interfaces which trick your users into sharing more info about themselves than they really want to." (As defined by the EFF). The term "Zuckering" was suggested in an EFF article by Tim Jones on Facebook's "Evil Interfaces". It is, of course, named after Facebook CEO Mark Zuckerberg.
Example: Facebook.com (August 2010)
Facebook released a new privacy UI recently (date of writing: August 2010), claiming it provided 'new, simplistic privacy choices'. However, in reality, achieving full privacy is an effortful process, requiring a user to visit multiple pages. This process is explained in a YouTube video: How to Maximize Facebook Privacy by the EFF (Electronic Frontier Foundation).
James Home's proposed UI makes it extremely easy to reduce or increase the amount of information you publish about yourself on Facebook. Such a UI would be great for end-users (perhaps alongside an advanced UI that allow granular settings). However, this could negatively impact Facebook's growth. As such it is not surprising that Facebook has not implemented this kind of design.
Update (07 Dec 2010)
According to an article by Catherine Thurtle on iMedia.com, iMedia spoke to Facebook about the privacy issues outlined on this page, and Facebook responded saying that it has "tried to granulise and learn from its mistakes".