If you delete then restore your facebook account, do you retain all of your friends?

Yes

You can also change your search preferences in your privacy settings so that new people can’t search for your profile. That may be easier than deleting.
And, @Jude is correct, your friends will stay.

Agreed with @ANef_is_Enuf… don’t bother deleting your profile; just change your privacy settings so that only friends can see anything beyond your most basic information. (Honestly, I’d think most people would prefer their settings that way anyway…)

If you go to delete your Facebook account, it initially is only suspended. If you log back in within 30 days (I think it is) then your account will not be deleted and you have the opportunity to restore it. I’ve done this process and lost no data.
On the other hand, if you don’t come back within the time frame, your account will be deleted and all that data will be lost (to you.) I’ve done this process as well, and I no longer have a Facebook account.
So now I don’t know when anyone’s birthday is anymore…

@koanhead By far the most useful thing facebook is for is rembering birthdays. My HTC phone even tells me if it’s within the next week when they ring me because it’s linked to facbook :D and yes is the answer.