I agree with anigbrowl that this too vague and open-ended for a meaningful answer. But maybe a few datapoints will help you. (And for context, I'm generally considered a little on the paranoid side amongst my friends/peers.)

In general, if you treat my data as mine and are respectful about it -- explain to me why you need it, keep it safe, and let me delete it (bonus points for exporting) -- I'll be reasonably generous with my information. With that said, and in no particular order...

- I prefer that data be as encrypted as possible, yes. But even more important to me is that when I delete the data on the front end, you delete it from the back end. And that there be a way for me to delete my entire account.

- I will give you location/contacts/calendar/etc. data access if your service will provide me ongoing value as a result. I'm reluctant to hand that data over for a one-time benefit, largely because I don't believe you'll delete it when you're done. Similarly, I tend to be reluctant to hand over contact data just so you can find my friends once (I'll just do manually searches for the people I care about), and very reluctant to let anything connect to Facebook.

- I do not find any sort of privacy-for-more-"relevant"-advertisements trade-off to be worthwhile. Frankly, I question whether anyone who has given it a few moments thought does. So far, I have no found targeted advertisements to provide me with any utility...except that I will occasionally lightly game the system to make unaesthetic/annoying advertisements go away.

- If you only allow me to login via Facebook, I will use a fake profile (fake name, email, everything, no friends) to test out your service for fun, but will probably never use it seriously nor connect it to my main/real account.

- I will absolutely dig through news articles and your support docs to find the answers to these questions. If I have to drop to your Privacy Policy to try and delete my account, I'm already pissed. If your answer to "is my data protected?" is a one line in your privacy policy saying "We use industry standard encryption to protect your data in transit and at rest.", then I'm gonna go pop some popcorn and wait for Stealth-Startup-ppening (or is it StealthStartupGate?) to begin.

- For me to want to pay you, I have to trust you. If you don't respect my privacy as a free user, I'm never going to trust you enough to want to pay you. On the other hand, if you win my trust from the outset -- specifically by making it easy for me to leave by letting me export my data (where relevant) and letting me deleting my data when I quit the service -- then I am way, way more likely to pay you for other add-ons.

At the end of the day, I don't know how secure your service was -- I don't have the time or the competency to audit your code and organization, even if you were willing to open up to me, and that would just be a snapshot in time anyways. So I have to go by other heuristics, and I do that by your founders' and notable employees' reputations, what you say in the press, the quality of the code that I experience as a user, the language in your app (do you talk to me like an adult human?), the look and feel of your site, and the quality of your support docs. And from that, I get a sense of what the people on the other side of this app/service/site are like, and if I want to do business with them.

TL;DR: How much you respect your users shows. I go from there.