This is the convention I have been using on setting privacy for the profiles I manage:
If the person is living, privacy is set at "Private". (I have also been manually entering profiles, and have chosen to leave out most living individuals rather than include them as "unlisted" or "private", for instance cousins of my own generation).
If the person is deceased, but has living children, privacy is set as "Private with Public Biography" and I have limited the profile to information that is publicly available from obituaries, wedding and anniversary announcements, etc.).
If the person is deceased and has no living children, privacy is set at "Public".
What do others of you do?
(PS - Is there anyway to organize this message board so there is one "sticky" thread for topics that recur, e.g. privacy?. It's awkward to search and scroll the board for past thoughts, which may be very helpful).