How trustworthy is Facebook?

I sent this email to Facebook a few weeks ago:

"I have just visited Facebook home page for the first time. You invite me to submit my email address and email password. Firstly, I am surprised you are asking me to submit my email password - what is the purpose and justification for this? Secondly, how do you obtain access to the contacts lists of webmail users? Finally, why is none of this (as far as I can see) mentioned in your privacy policy?

I look forward to hearing from you.

Simon Carswell"

I received this reply:

"Hi,

If you are referring to the "friend finder" feature, we created this
tool to help users quickly find friends who are already on Facebook.
This tool temporarily accesses your addressbook after you have entered your email information and displays the friends in your addressbook who have already joined Facebook. You will also have the option of inviting friends who have not joined Facebook yet. None of the information you enter is saved, and this feature is completely optional; you do not have to use this feature to use our site.

Let us know if you have any other questions.

Thanks for contacting Facebook,

Don
Customer Support Representative
Facebook"

I don't know about you, but I don't like the idea of handing over my email password to anyone. I suppose to be honest I have done it, such as recently when I acquired a Blackberry and needed to enter it to set up my email account on there. But delving into my address book feels different. And if the information is not saved, why is this not mentioned in the privacy policy?