Highly debatable issue. Recall the example of 'lamebook.com'. If I remember correctly, they were sued by FB. It seems to me that the case ended with a settlement. LB has to put in a conspicuous place notice that it is not connected to FB and some guidelines. More on http://en.wikipedia.org/wiki/Lamebook # Facebook_legal_action
It is legal, but nothing will stop FB from suing you should they want to whether they are right or wrong.