There is a setting to change the default security in LJ.
Go to the admin console *while logged in* :http://www.livejournal.com/admin/console/
Then enter the following command:
set newpost_minsecurity level
Where "level" can be "public", "private", or "friends". Custom security settings are not allowed.
The next time you post, the security drop box will still show "Public" regardless of this change. Clicking a new security setting will have no effect at this point. However, when you click "Update Journal", it will be posted with the security setting you set as a default in the console. At this point you have go back and edit the entry to change the security to anything else. The correct security setting will then be displayed.
This sucker was buried pretty deep. See FAQ Question 120
That means I may resume "friends only" postings sometime in the future. Most of my stuff is publicly acceptable anyhow.