Bruce Schenier at Wired wrote an excellent piece ("It's Time to Drop the 'Expectation of Privacy' Test") about the need to drop the "Expectation of Privacy" test currently used as the primary case law that determines the constitutionality of government action. He cites some of the analysis and proposed alternatives from Daniel Solove, Orin Kerr, and Jed Rubenfeld.
It is crucial that the US take concrete efforts to address this issue; more information is being created (in 2008, 4 exabites of unique information was generated - more than all of the data created in the preceeding 5,000 years), digitized and held (potentially indefinitely), this will only become an increasingly dire concern. This is especially true when one considers the spectre of a privatized federal intelligence-gathering infrastructure.
The problem becomes apparent, too, when one thinks of how defamation law works given the "public figure doctrine." Under the current model, private citizens are affored more protection than public figures. But what constitutes a "public figure" in the age of social media? Does simply creating a MySpace profile qualify? What about publishing a Twitter feed?
In the book Born Digital (which I'm reading), the authors (John Palfrey and Urs Gasser) run through the lifecycle of a child born today to illustrate how vastly more data is created and available about them than in any generation in history - and how decisions that will affect the rest of their lives are made without their consent by unwitting parents.
In the area of government and civil rights, there have already been abuses of the warrantless wiretapping power that the Bush Administration claimed for itself as the administration illegally wiretapped journalists and aid workers. Perhaps the solution to this lack of privacy is more transparency: what if we requried the federal government to publish online a list of all of its active surveillance investigations? The argument that such information should be protected because it would alert criminals/terrorists to the investigation is moot because they already assume this is the case, and this might dissuade the government from abusing its power.
In the area of social norms, we're running up on some terrible uses of existing criminal law with respect to privacy - like those protecting sensitive populations like minors as teenagers are being prosecuted for sending or holding nude photos of themselves. (These prosecutions pervert the spirit of these laws becuase they're in place to protect the victimized population; they're not meant to be applied when the victim is the perpetrator).
I'm increasingly convinced that the future lies not in restricting access to information, but in protecting society after the fact in a world where everything is transparent. We should be asking ourselves what we can do to render harmless private information about us that might be disclosed (because we must assume that it will be). What will this look like? It will change everything from how we validate identity, to how we educate/prepare children, and it will likely fundamentally alter our societal/cultural mores.