Facebook users may be seeing status updates with the following alert about a change in advertising policy with instructions on changing privacy settings. According to a Facebook source, there has been no change.
Photos posted by friends will not appear in Facebook ads. The text is clear in stating Facebook ads can be triggered based on "relevant social action". In other words if a friend talks about the recent trip to Cancun, then a relevant ad may appear. It does not grant permission to pull photos into ads.