*sigh*
First off, what that dude is doing and what you are describing are quite different. That guy is marketing pictures of people to the people who are the subject of the pictures.
Secondly, it's important to understand that you are asking a legal question to a bunch of faceless yahoos (me included) on the internet. Odds are that none of these people (me included) are lawyers, and therefore not qualified to answer your question.
Third, it's important to keep in mind that laws for this kind of thing can vary by state and country. You need to understand your local laws to understand how it applies to you.
Fourth, this topic comes up constantly. As do many. Use the search bar. Search is your friend.
All that said... GENERALLY... in my experience (again, I'm not an attorney... you should consult one) you can take pictures of people and sell them as you please. You cannot use them for commerical purposes (advertising a product or service), but other than that, you're fine. You do not need a model release. Is it good to have one? Sure, why not? However, good luck getting model releases from everyone you shoot randomly in the street. There's also that element of someone may actually tell you they don't want their picture used, and then if you're a nice guy you're kinda compelled to not use it, which can be very annoying if you get a really good shot.
Generally, the only rule on this is the people need to have no reasonable expectation of privacy.... so, you could certainly take a picture of someone strolling down main street or hanging out in a store... but you can't shoot a picture from outside of someone sitting in their living room.
BTW, it's also perfectly legal to take pictures of kids, as long as the shots are not pornographic or exploitative. People have a tendency to lose their minds if you're taking pictures of kids and assume it's all illegal. It's not. It may appear to some people to be somewhat creepy, but it's not illegal. (again, check local laws)
Here is a very interesting link to a very famous case on this topic:
Nussenzweig v. DiCorcia - Wikipedia, the free encyclopedia
I also carry around printed copies of this document in case someone decides to go bananas on me: (which has happened to me on a couple occasions- once when I shot a picture of some cute kid looking exceedingly bored on a kiddie ride at an amusement park...

Love that shot.

NOTE: I'm not a very nice person when it comes to this.
Bert P. Krages Attorney at Law Photographer's Rights Page
And AGAIN... check your local laws and consult an atty.