Permissions - Newbie Style Question

[Bob <kentuckybob@worldnet.att.net>]

I have three debian based boxes running (two Corel and one potato.)  On all
three machines, the default install is to allow everyone on the system to view
every directory, including each other's home directories.  This is true when
using telnet or ftp as well.  I really have no need to read my son's
directories nor he mine.

I have two questions (for now):  What is the permissions setting for the home
directories.  I suspect it should be something like rwx------  or rwxrwx--- if
the group is unique to the specific username.  Is this correct?  Is one
preferable to the other?

the hosts.allow file contains the line:

ALL: .foobar.com 

The machines do refuse connections from other domain
names.  (I did some switching of domain names to test this.)  Is it preferable
to identify specific machines in this file, such as hounddog.foobar.com?

The hosts.deny contains the line

ALL: PARANOID line.

Thanks in advance for any assistance

bob