Facebook will "die" when it is no longer unique. They have defined the template for how all future websites need to operate. And I guarantee within a few years developers will find ways to standardize (or at least ubiquitize) every important feature of Facebook.
Once every website has a universal login, contacts, and sharing features, then why would I use Facebook, when I can use X, Y, or Z which have lots of other features too? And then the cycle will start over again.
Exactly. The two moments of the cycle are: killer feature and protocols.
When a feature goes mainstream, it neads to be openly standartized (Take GUI toolkits, take instant messenging). Then another feature/innovation moves the "battle" elsewhere.
Facebook somehow made MSN instantly much less relevant by combining jabber to their social networking site. Someone else will surely do the same, by combining social networking protocols (plug Dispora++?) to something else interesting by itself for its data. Maybe more interactive appliances and webstores? Imagine for example every appliance (phone, computer, camera…) having an adapted 'view' of your dashboard and relations, backed by a distributed datastore with proper backup and cryto.
Once every website has a universal login, contacts, and sharing features, then why would I use Facebook, when I can use X, Y, or Z which have lots of other features too? And then the cycle will start over again.