I don't think I signed a wavier for that!

I have never set my personal networking sites to private. Even while being constantly bothered by another person whom I did not know, I had never set them to private because I believe that I have nothing to hide.
A friend of mine had recently applied for a job and they asked for either her myspace address or facebook account on the application. Though I understand that these sites may give employers a perspective on who the person they are hiring is inside, it is a bit bothersome to me. All of a sudden, even our personal networking sites have to be monitored by us in what type of image we are giving off not only to our peers, but to future employers as well, and then balance the two and try to make the best impression on both ends. It sounds simply exhausting. Most people have a difficult time as it is just trying to keep up an image that they try to convey to their peers.
Can a networking page really be a deciding factor in whether a person is right for the job and what factors do they look at? I used to have dyed hair and, because I worked for the State Senate campaign, I had to cover it somehow every day when I went to work. I am glad that they did not use it as a criteria in whether to hire me or not, but I know other employers have, even though the solution was very simple-they could just ask me to dye my hair back. So will an employer now look back on my page and judge my employment because I used to have my hair dyed in an unnatural color?
I understand that there are privacy settings, and I constantly wonder to myself what they do with applicants who do not have any of those accounts or make them private. Do they get pushed aside or does it become an advantage for them? How is it decided whether a person is right for the job or not?