And android needs some blame for not allowing their users to opt out of granting that permission (alt. forcing the app to ask for them every time they are used).
Apps that require too many/creepy permissions needs to be distrusted and this is the only way that is going to happen.
No. I'd never install the facebook, flicker, whatever app if they require access to contacts or sms and internet at the same time. I have sensitive information in my contact-list and I don't trust anyone that is foolish enough to actually ask for permission to read any of those, at install-time, with my data. Simple as that.
Make a "private" version of the app that doesn't require those permissions or no deal.