That assumes that people don't ignore the constant surveillance and largely do whatever they were going to do anyway. Most non-geeks seem to do just that.
(Whether that is a good idea is another matter. Also, I still don't like Facebook.)
For anyone interested, there's a visual novel that explores this idea.
"Don't Take it Perosnally Babe, it Just Ain't Your Story."
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The driving motivation for the story is that this generation _raised_ on "4chan" and "Facebook" shares deep and intimate things with each other _knowing full well_ that what they're sharing may be under review.
Towards the end it implies that privacy is an antiquated concept; and yet that changes surprisingly little.
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I'm with you; whether it is a good idea or not, I can't say. I'll just wait until it manifests in culture.
That being said: I don't like the implications of getting rid of privacy. Not when society likes to latch on to the most unimportant of biases when making incredibly important decisions. (For e.g: getting turned down for a job offer because of some political, philosophical, or religious rant on your Facebook wall.)
If you're going to hold such things over my head; then I'd rather not share them with you. -- And that (to me) is the essence of privacy.
It's why I like Google+ and Diaspora so much. I think the concept of "Circles" or "Aspects" gives the user a lot of flexibility when it comes to managing their own personal idea of privacy.
(Whether that is a good idea is another matter. Also, I still don't like Facebook.)