Is my information protected? Or can someone tell where I live by my domain name? Why do hosting services offer a protected information service for extra money? How can I view that information?
You should not use a registrar that charges extra for private registration. A domain owner shouldn't have have to pay off their registrar to keep their private info off of the internet. That's akin to extortion or blackmail ("pay this extra fee or we're going to give your billing address and contact info to strangers").
It costs the registrar nothing to keep your registration info private, thus many registrars provide this option completely free of charge. So why use shady registrars who charge you money just to not give out your personal info? After all, they're liable to screw you over in other ways as well if their ethical standards are that low.
If you register a domain name without protection, a quick WHOIS search will yield your name, email, street address, and fax. With protection, it looks like this:
Registrant Name:Whois Agent Registrant Organization:Whois Privacy Protection Service, Inc. Registrant Street1:PMB 368, 14150 NE 20th St - F1 Registrant Street2: Registrant Street3: Registrant City:Bellevue Registrant State/Province:WA Registrant Postal Code:98007 Registrant Country:US Registrant Phone:+1.4252740657 Registrant Phone Ext.: Registrant FAX:+1.4259744730
I recommend you spend the extra few dollars for protection, however if you are a small business or indivual who has no need for it, then don't purchase it. This is more for people to whom security and privacy is a concern.
Without WHOIS protection, not only people can view your personal data when inspecting your domain, they can GOOGLE your personal data by your name - and they can see not only your address but also all the domains you own. That is because some websites cache whois results as web pages e.g. http://whois.domaintools.com (I'm not sure that's even legal)
But it depends on registry (what is the domain extension) - for example my national registry hides WHOIS information for individuals by default and there is no need to pay extra for that. Also, if you look around, you may find companies that offer WHOIS protection very cheaply or even without any extra charge.
Finally, I would say that today privacy is needed for security.