Automated access is a difficult issue for any web service, so I won't argue with their decision -- it's their service and they own you.
However, when I signed up for Facebook I gave them my Gmail address and password, using their find friends feature:
It was very helpful -- I didn't think that I would know anyone on Facebook, but it turns out that I knew hundreds of people.
You also agree that you will not use any robot, spider, other automated device, or manual process to monitor or copy any content from the Service.
Facebook can also import contacts from Yahoo and Hotmail. Yahoo TOS says:
You agree not to access the Service by any means other than through the interface that is provided by Yahoo! for use in accessing the Service.
And Hotmail TOS says:
In using the service, you may not:
Use any automated process or service to access and/or use the service (such as a BOT, a spider, periodic caching of information stored by Microsoft, or "meta-searching")