Cookies tracking your browsing, websites collecting email addresses, companies building profiles of your online behavior. DoubleClick is on basically every major website tracking what you look at.

Are we sleepwalking into a surveillance nightmare or am I being paranoid?

You're not being paranoid. The amount of data being collected is concerning. At minimum, use cookie management and clear them regularly.

I think most people just don't care yet because they don't understand what's being collected. That will change when something bad happens with the data.

The Patriot Act just passed and gives the government broad surveillance powers over internet communications. The privacy ship may have already sailed.