I think we have to determine what do we mean by friends? as a Christian most deep relationships with non believers will usually fade, into acquintances. However, what happens if the person is not antagonistic towards christianity or you, there are fines lines in this issue and it is not as cut and dry as you are making out.
Many Christians have good friendships with non believers, and some don't. personally, haveing a deep friendship with a non believer will usually fizzle out as both wil have differing views on all subjects, particualarily, kingdom against the world.
This does mean we become total seperatists, Holy yes, for in Christ we are Holy before God.
I think this one really comes down to conscience. Ive got plenty of non christian friends, and what a great witnessing opportuniy, however, I don't do what I used to.. and they don't even ask me know. The initial question is should we isolate ourselves.. the answer is no.
Blessings
Phil