Over on the Facebook blog, head of security Max Kelly has just explained what to do to memorialize the profile of someone who has passed away:
We understand how difficult it can be for people to be reminded of those who are no longer with them, which is why it's important when someone passes away that their friends or family contact Facebook to request that a profile be memorialized.
…When an account is memorialized, we also set privacy so that only confirmed friends can see the profile or locate it in search. We try to protect the deceased's privacy by removing sensitive information such as contact information and status updates. Memorializing an account also prevents anyone from logging into it in the future, while still enabling friends and family to leave posts on the profile Wall in remembrance.
If you have a friend or a family member whose profile should be memorialized, please contact us, so their memory can properly live on among their friends on Facebook.