There are actually three issues:
1) Orkut claims irrevocable unlimited license rights to everything you post. Most people don't understand what that means. One example of this is that many of my friends have posted pictures that I've taken. This is probably not a problem, generally, but they've granted Orkut a license to use them without consulting me, and created a legal tangle should I have a problem with that, forcing me to have to perform a legal struggle with Orkut, because of their unwitting actions. I think this is rude behavior on the part of Orkut, but their prerogative to demand.
2) Orkut may share personal information with Google in an unrestricted way. Google is unwilling (so far) to discuss what use they may make of that information.
I >suspect< that Orkut is a way for Google to gather personal information about their clientele for marketing purposes, and to try to form a more solid relationship beyond "I just use Google for search because it's convenient". This is not terribly nefarious, but the kind of data that could be collected to do so has wide potential for abuse, and people should be aware that that's what's going on. Some may not care, but many people I know are signing up without reading or understanding the implications of the above three points.
Google's position of power is somewhat due to their stringent policy of not associating searches with personally identifiable data, not only about you, but about who you know and how you interact with them. They may be able to do this now (according to the tangle of policies they've created), and if they suddenly merge Orkut and Google, they will certainly be able to do this for everyone who's used the service up until that time. The construction of such a database in a piecemeal fashion might be called nefarious. I'm not sure. It would certainly be an unprecedented collection, and I suspect that it would be ripe for abuse, both by currently legal means that didn't foresee such a resource, and by malicious intruders.
I don't have any reason to believe that there's anything sinister going on other than what I've just described, but it seems to me that the construction of such a database with the loopholes above is reason enough for some concern, or at least some explanation.
I'm curious about what information Google is amassing, and I think everyone has a right to know how it will be used (or at least publicize that Google is unwilling to say).