Okay, my girlfriend has just got the HTC Desire for herself and 1 for me, she is getting the error message all the time and cannot link her contacts to Facebook however I can.
I logged into my account on her phone and was able to sync my contacts fine. Tried this on my phone with her account, guess what, ERROR MESSAGE!
So basically this means there is absolutely nothing wrong with her phone, it is something to do with her Facebook account.
Can not be anything to do with privacy settings on Facebook because my account is locked down, the same as hers. Only difference is my Facebook account is registered to my Hotmail email address, hers is Googlemail.
Going to change her email address and see if this fixes. Will post update.
UPDATE!!! :-
Okay, changed email address assign to her Facebook account, still got the error message and could not sync contacts.
However (and a lot of you are not going to like this), created a new Facebook account with her Googlemail address as a test, added me then synced with her phone. worked perfectly fine and synced my Facebook with my contact card on her phone.
FIX!!! :-
We have found the fix! go to the PEOPLE(contact list) app. Go to the Online Directories (globe) tab. Hit Facebook. You will be asked to log in to your Facebook account. Once logged in, it will show all of you contacts on your Facebook account. Go back to the full list of your contacts on the phone and try and sync.