I think it's enormously over-valued. I've seen people compare it to Google, which also relies heavily on advertising for much its revenue (more than 95% in Google's case). The difference is that users often use Google to find things or services they want to buy, which makes advertising attractive to both the user and the advertiser.
Facebook advertising is mostly an annoyance, and likely to get more annoying after the IPO.
If you're considering investing in Facebook and want sobering up, read about lastminute.com, MySpace, Friends Reunited, Geocities, Boo.com, Bebo, AOL, The Learning Company, Infospace, etc...