I'm generally paranoid about such things, so I intend to have the Terms and Privacy Policy all set prior to a public launch. Whether or not this is a good approach... no idea. The peace of mind is worth it for me though, since I'm a worrier.
I wanted to ensure that I was as thorough as possible, so I brought up the process during my first (free) consultation with a lawyer. To minimize the billable hours, the lawyer recommended I piece them together myself and then just send it to him for any modifications as necessary. I'm just about done with mine and hope to send them off in the next day or so. It will probably cost more than I'd prefer at this stage, but the cost of getting nailed in a legal issue when such an agreement could possibly protect me would likely be higher. Or at least that's what I keep telling myself. :)
It probably wouldn't hurt to look through the Terms of your competitors to get a feel for what others in your space are covering in their legal docs. You might also be able to buy some standard templates, although who knows how well they'd actually hold up.