Ya, Facebook has answer for this- "Facebook GROUPS". It lets you separate people based on the connection you have with them. For ex, you could have groups like Family, Friends, Collegeus etc. So that an update is restricted within than circle.
Facebook's privacy settings are now pretty good. You can make things visible or invisible to everyone, networks, friends of friends, friends, friend lists or individuals and any combination of these things, e.g. a status update visible only to family except my mother.
I'll start using Facebook lists when they implement it properly. I want my lists of friends to be 100% completely separate. Separate walls, separate news feeds, and I want it to be very obvious which group I am currently working with at any time. If they can't give me that, I'm not interested.
Some of this functionality may be there, but the UI and UX is so horrible that there is little way to predict the output of the system.