Personally, I'm going to move away from Android, because I feel like I cannot use the device without the sensation that my privacy is under assault, not only from some App creators, but from the OS itself. Many of the most popular utility apps ask for very intrusive permissions - unique identity, location, sms, contacts etc - and the OS provides no way to effectively sandbox your data. The OS does not believe that you should be able to control access to your data, on your own terms. I have also come to believe that there is a fundamental misalignment of incentives here - I'm only willing to use a smartphone on the basis that I'm buying a device which attempts to protect my privacy, not attempts to expose it, and that will only work if the business model of the manufacturer doesn't rely on mining my data to sell advertising.
Unfortunately, I'm not sure other operating systems are much better.
> Many of the most popular utility apps ask for very intrusive permissions
At least that is getting rectified, little by little. Apparently 4.3 introduced a tool called "Apps Ops", which brings some of the fine-grained permission control seen in Symbian (where it was actually possible to select which permissions to grant) to Android. [1]
Once the power users learn to make most of this tool, the app developers will have no choice but to learn to cope with their apps getting too onerous permissions yanked from under their feet. Which, to me, is a very good thing indeed. It gives the developers one more avenue to compete in - make your app too nosy and you risk getting sidelined by an upstart clone that behaves better with user privacy.
Seeing how long it took them to realize that "Contacts" were something that you should ask permission to use I don't know if I'd trust apple with knowing which planet I live on.
http://www.cl.cam.ac.uk/research/dtg/android/mock/ is a neat way to stop applications asking for too many permissions getting what they want. It'd be nice if it were being maintained somewhere/possibly pulled into CyanogenMod.
That's definitely one of the options. I think, so far, it's CyanogenMod, Paranoid Android, Replicant, Sailfish OS or Firefox OS. My problem with the Android variants is that they're vulnerable to Google; if Google decided, for instance, to move really core functions into Play Services, they could make these variants unviable. Also, after-market OS's have never been popular, and you want to put your weight behind something which might actually be sold in shops, and stands a decent chance of gaining significant market share and momentum.
You're right, though, that I'm being a bit overdramatic, the options are definitely there.
Unfortunately, I'm not sure other operating systems are much better.