"Ethical" is an interesting framing.
As a teacher, I wouldn't want to do it. (I've had friend requests from former
students that I've turned down.)
I don't think a teacher should be fired or disciplined for being friends with a student on a social network site.
But if a teacher asked, I also really wouldn't recommend it.
I think the sort of social situation that Joe talks about is different in a few ways (and has it's own drawbacks but is not universally a bad idea), especially in that the social interaction is (how to best put it) self-contained? The people involved are conscious at that moment that the other people involved are... involved. (I'm not at peak eloquence this afternoon.)
The problem with social networking sites is that it's really hard to remember who is involved -- who can see what. You post the sexy picture trying to get the attention of the cute boy in English and forget that your English teacher will see it, too. Or you post the sexy picture trying to make the cute guy you're interested in laugh, and forget that your students will see it too.
Ideally that doesn't happen, of course, but in practice it does, a lot.