There's also the problem of adding people to friends list because you want to watch their journal, but you don't necessarily want them to read yours - that's why I've always thought that LiveJournal should have some sort of "trusted" feature where instead of simply adding people to a friends list, you also can have the option to entrust them with access to your protected entries.
Filtered posts take care of that, but still... it's not as official as I think it should be.
Obviously, you should never post anything in a protected entry that you think could be incriminating or dangerous to publicize. If you don't want your phone number in danger of being publicized you should only give it out by request. Even stuff like what you think about someone... if you believe it's going to cause drama, the little "lock" really isn't going to do anything.
In fact, I'll go as far as saying that I don't even see the REASON for protected entries. The best way to handle sensitive information is to realize that posting something accessible by others on the Internet is as good as publicizing it to the ENTIRE Internet, and you might as well post a public entry, omitting parts that could be accessed through the poster, through a one-on-one, need-to-know basis.
Private entries, well, they're private entries. Woo hooray for private entries. Those are as safe as any other password-protected personal info.
Speaking about "trusted" and "security labels," my job is going really well. As of today, I only have one more month left to work at Sun, but things are finally getting interesting and I finally have things to do. I can help other employees, I'm not spending hours just goofing off and surfin' the net because I have nothing better to do (although I can take time off to do an LJ post or two, like now), and I actually understand and like what I'm working towards. BTW, unrelated to my division, Solaris is open-source and free, all you Linux fags, so start using that instead.