Privacy is about making people confident, about making people trust you. If people feel safe, they will share anything, and a clear privacy policy makes people feel safer.

TRUSTe reported several tests on this side, even Facebook had a huge benefit from changing the "privacy policy" policy to something more clear.

Just to tell something more on this side, we are working with http://dribbble.com/jonnotie to make our privacy policies not only useful, but even beautiful :) Stay tuned :P