In the case of Android, what you can see when you're downloading an app is there are very granular specifications of what data they're looking for. You can click on each type of data to see an explanation of why they are looking for it. Furthermore, you can deny the app access to that data. In some cases that means the app won't work, but in most cases you can be very specific about what data it has access to and when it has access to it.
In relation to your question about privacy policies and terms of service, we've also taken steps to make sure that those are more clear-cut and understandable, especially on mobile devices.