I've been wondering the same thing, Manda.
You'll notice that my gallery (shamelessly linked below) has NO identifiable pictures of my kids or anyone I know. This is because I am paranoid about pics of my kids.
I've read a half reasonable rant from a Boston based teacher who HATED photography students and tourists in his picturesque little town because he didn't want to end up on the 'net or on a gallery wall from their photos.
On the other hand, my two favorate photogs from another forum post the most lovely pictures of people frequently. Their themed photos of sadness, contemplation, and joy are so beautiful that I want to cry. I was naive enough for a while to think that they were all pictures of models, until one of them PM'ed me that they were just people on the street. Often the emotion was so intense....
Forget the fear of being sued, I don't want to take a picture of a person in an identifiable setting, and find that person was stalked because of it. There are some weird f@(k!^g people out there.
Others may have a definite standpoint one way or the other. This theme is not a new one to our world, but it is a theme that recently has new meaning.
Do you expect privacy while walking through the city? What about on your favorate beach? What about in your favorate resturant? What about when you're in your robe getting the paper off the front lawn on a Saturday?
If someone was taking pictures of your kids at the park would you leave? Confront the photographer? Ask for royalties?
There's always a '...then again...' statement: If you had your camera and you saw a heartfelt emotional private scene would you go for the Pulitzer or avert your eyes?
My little rant is over for now, but this subject isn't.