Earlier this summer, Michael, a sales assistant, was sitting in the cafe in London's Holland Park. 'Then I saw them - Gwyneth Paltrow and Stella McCartney,' he says. 'They were pushing prams. So I got out my camera. At first, they didn't appear to notice.' As Michael explains, a camera like his - a small Canon, the size of a credit card - is not very conspicuous. 'But then I think Gwyneth realised what was going on.'

Michael always carries his camera with him - 'it's just easy, so small, always there in case something happens'. One of the resulting photographs was published in Heat magazine, in a slot called You've Been Snapped! which features celebrities caught, unposed, by members of the public.

In May, chef Matthew Stevens, 24, was cleaning out the freezers at the Quantuck Gateway restaurant in Bridgewater, Somerset, when he was bitten twice on the hand by a deadly Brazilian wandering spider that had made its way into the kitchen via the restaurant's delivery of bananas. Despite 'feeling really dizzy and quite sick', Stevens managed to fling some hot water over the spider, 'which seemed to stun it'. He then fired off a few pictures of it using a Motorola V600, using the digital zoom to get in nice and close.

A few hours later, by which time the entire right side of his body was paralysed and he was being stretchered off to receive oxygen at Musgrove hospital in Taunton, the doctors finally managed to identify the spider by emailing the images on his phone to Bristol Zoo. They could then administer the correct anti-venom drugs and Stevens made a full recovery, although he insists he 'checks the bananas much more carefully now'.

Another 'camphone' image - this time a murky snap taken at a birthday drink in a north London pub - has provided key evidence in the investigation of an attempted murder. It shows David Sayer, who was later stabbed five times; in the background are three men playing pool. The image was taken discreetly using a mobile phone, rather than a camera, which may explain why the assailants seem unaware their faces are being captured. The picture was the centrepiece of a recent BBC Crimewatch appeal.

Three very different examples. But now so many of us have tiny digital cameras or boast cameras in our mobiles - one in five mobile phone owners in the UK, according to Jupiter Research - that most of life can be documented.

'Rather than the traditional concept of "the few watching the many", the popularity of camera phones has created a situation where the many are now watching the many,' explains Les Back, professor of sociology at Goldsmiths College. We're all now monitoring each other, ready to snap any moments of weakness and record them for posterity, or in some cases, profit, as Prince Harry will readily confirm.

That infamous shot of Harry wearing Nazi regalia at a fancy dress party - taken with a mobile phone - was sold by a fellow party-goer to The Sun for about £7,500, a very humble figure given its impact and the sales benefit to the paper.

According to Nokia, which now likes to call itself the world's biggest camera manufacturer, the number of camera phones sold globally had exceeded that of digital cameras by mid-2003 (at 200 million). Nokia predicts this figure will treble by 2006. But at present, according to Jupiter Research, not even a fifth of UK camera phone owners have taken a picture with their phones, and only 6 per cent have sent a picture message, also known as an MMS.

The big problem was that, until very recently, the quality of images was rather shaky. This was partly due to the technology itself, but also because the resolution was often set deliberately low, so as not to use too much of a phone's memory. But this is less of a problem in the era of removable memory cards. We also shouldn't confuse the ropey quality of a highly compressed MMS with a phone's underlying ability to take pictures, which can then be (expensively) emailed from the mobile, or transferred on to a computer.

Either way, until the very latest models, camera phones have simply not produced a calibre of photo worth printing. In fact, they've not even been good enough for angling enthusiasts to document big fish that they've landed, according to a senior news reporter for the Angling Times, who ruefully warned that 'the real horror story is when the occasional angler catches an absolute whacker, and photographs it using a mobile phone or a disposable camera, only to find that the picture isn't of publishable quality'.

Yet there's an old saying among photographers that the best camera is the one you have on you at the time. In this sense, small digitals or camera phones are now an indispensable tool for journalists, whether fashion editors air kissing at the catwalks or hardened newshounds. The BBC now issues Nokia camera phones with beefed-up microphones to 'most news reporters', according to the corporation's TV editor of newsgathering, Jon Williams. 'Television is all about pictures,' he says. 'So not having any isn't a position that I feel comfortable with.'

As reporters inevitably get to the scene of a breaking story before film crews, they are in an ideal position to provide 'first responder stuff' and, as they can then email these shots directly from a phone to a news desk, they can provide 'holding images', until better material arrives. That this can now be replicated from any part of the world 'unlocks the potential for getting more stories, from more places, more quickly,' says Williams. 'Without wanting to overstate it, this technology liberates TV production.'

He adds that the pictures taken on a good camera phone 'can actually be quite decent', before explaining that - even before the London bombings - they had already provided images for broadcast stories that would otherwise have remained unseen, including the 'ghost ships' loaded with toxic materials - camera phone pics were taken by a reporter from another ship off the north east coast - and the recent floods in Thirsk, north Yorkshire.

Williams is keen to encourage the public to continue emailing any news-worthy images they've taken on their phones, a process he calls 'the democratisation of newsgathering', adding that the BBC might pay for a really hot story - though probably 'less than four figures'. The London bombings earlier this month were largely documented through mobile phone pictures.

Williams is not particularly anxious about hoax images. 'It's the same as any other news story,' he says. 'Always check your sources. At some point, somebody will get hoaxed, we hope we have the processes in place to prevent it being us.'

What's more, since pictures can be sent instantly, people are increasingly using them to lodge complaints about iffy holiday accommodation, say, by emailing the images directly to the holiday company while they are still abroad rather than having to find a travel agent.

Permanently packing a camera phone can also help preserve a no claims bonus, says Philip Southgate, spokesperson for Prudential Motor Insurance. 'People's ability to document accidents has evolved with technology,' he says. 'As well as noting details on paper, nowadays photographs taken with a mobile phone can also be compelling evidence.' Southgate explains that even a crude image, showing the vehicle's road positioning or the weather conditions, can be very useful. A good tip since two-thirds of Brits involved in road accidents admit liability at the scene, according to Prudential.

Professor Back is less optimistic. He thinks camera phones lead to 'the memorialising of bad behaviour', by which he means the so called 'happy slapping' phenomenon, insisting that it is all part of a wider cultural syndrome. 'The obsession with moral weakness, bad behaviour and becoming spectators in other people's lives is having a damaging effect,' he says.

His point is illustrated by events that took place in Edinburgh a few weeks ago, as a 34-year-old man stood precariously on a small ledge, 100ft above the glass roof of Waverley Station. In what it called 'a sad indictment of today's society', The Scotsman reported that a ghoulish crowd 'camera-phones held aloft, manoeuvred themselves into the best spot to get a snap. "Just jump," shouted one sadistic voyeur.' The technology itself is not 'unremittingly negative', says Professor Back. 'It's how people use it that matters.' Knives are clearly for chopping, rather than stabbing, and no one disputes the usefulness of glue, despite the fact that some teenagers choose to sniff it. What many people are concerned about is the surreptitious nature of the way camera phones work, and the impact that has on privacy. Some employers have made noises about security. Grave warnings have been issued to parents to cover up their toddlers in the park, and health clubs are rattled about their potential use in changing rooms.

Andree Deane, communications director of the Fitness Industry Association, explains that 'most major health club chains have a ban [on camera phones] in place, with signs in the changing rooms. In fact, a number of gyms now don't allow mobiles at all.'

In truth, short of banning all mobile phones, it is hard to see how anything can be done to stop people using cameras. There have been suggestions that we adopt a similar approach to Korea, where manufacturers have voluntarily prevented the shutter noise on camera phones from being disabled. But is this likely to happen here?

Professor Peter Whittaker is a member of the European Group for Ethics in Science and Technology, which advises the European Commission on policy. 'This is something people ought to be concerned about,' he says, 'and a matter I will certainly be bringing up with the EU ethics group.'

Inevitably, the communications director for Nokia, Mark Squires, thinks this is all a non-issue, pointing out that 'digital cameras can be just as small, and the way people carry [camera phones] clearly indicates they are taking a picture'. He also makes the point that in the early days of audio recording technology, the kit was supposed to make a bleep every four seconds so people knew they were being recorded.

Even the Ministry of Defence does not seem unduly concerned about the use of camera phones, simply asking all its staff, whether in active military service or civilian, to exercise 'common sense usage'. An MOD spokesperson said: 'There is no policy banning mobile phones on the front line, whether they are camera phones or video phones. We trust our personnel to use them responsibly.' There is, however, a 'restricted mobile phone policy' in certain areas of MOD buildings. 'If you start taking pictures of documents and pinging them to your friends, it's treated as seriously as if you're sending them to the Russians.'

It's notoriously hard to quantify exactly what impact the rising tide of camera phones is having on the overall camera market, seeing as so many are now sold online, but the major manufacturers all reported poor financial results for the first quarter of 2005, according to Jupiter Research. The Carphone Warehouse's UK chief executive, Andrew Harrison, says his company has 'seen an increasing shift towards camera phones, particularly since Christmas'.

What's definitely true is that cameras are becoming a standard feature in phones, in the same way that alarm clocks and colour screens already are. It will gradually become easier to send and receive high-quality pictures and footage. We already live in a society where, for good or ill, we are all watching each other more closely than ever before. So, welcome to the snaparazzi society.