The good: I have gotten back in touch with many good friends. I had a lot of friends from high school who I was very close to at that time, and that was before the internet took off, so we had lost touch.
The bad: The level of interaction is generally fairly superficial.
The ugly: Sometimes awkward situations arise. Do you "friend" your long-time-ago ex? What do you say to people who post things on your wall that you'd rather they didn't post? Why did that long lost friend appear, then disappear?
My favorite: Some of the really wonderful older people, mentors, youth group leaders, teachers, etc. who are on facebook. I so love being able to reconnect with them and let them know where I am now. It's not where I ever expected to be!