I promised a followup, in which I actually thought a little instead of simply bloviating! And here it is.
Let us, if you don't mind, stipulate that facial recognition is, to some interesting degree, a solved problem, and that it's getting more and more solved over time. This is the general problem of "given a picture of a person, find me public information about that person" (e.g. a facebook page, a blog, something published and legitimately Out There, most notably a name.)
So, to one degree or another, given a picture of someone, I can find out who that person is, and this is going to get easier and more accurate over time.
I said that then this leads to identity theft and so on, which is kind of silly on the face of it. Bad people can do these things without a picture of you, what they actually use as a starting point is that public identity, the kind of thing a picture can more or less lead us to. The picture is, ultimately, irrelevant. It plays little to no role in the bad parts of these scenarios. Mostly.
A see two actual genuine risks for the subject of a picture, here.
The first is that a modern digital picture places a face in a location, at a time, in certain company. If I can connect the face with the name, the identity, I am now in a position to demonstrate that John was Here at This Time, and hanging around with These People. Usually this isn't a problem, lots of John's friends probably know he's there. Still, occasionally John might wish to be discreet, and the idea that his efforts at discretion could now, or at some future time, be blown apart by some idiot street photographer might be uncomfortable.
Worse, with large scale computing and large scale photo sharing, it may soon be possible to establish not only John's location at a given time, but to automatically construct patterns of John's behavior in much the same way online tracking does. I don't think there's really much of anything that's actually beneficial to John that can come out of that, but the possibilities are certainly broad.
I'm fairly sure that people have raised the possibility of this kind of profiling as a real, albeit potential, problem in the UK with the ubiquitous surveillance cameras. I am certain that there are weird guys in the bowels of certain state agencies working on making that potential problem into a real one as fast as possible. The idea of being able to know in a real time where everyone is and what they're up to gives a certain type of spook a very real sense of well-being, and probably an erection to boot.
The second actual risk is this. A bad guy with a name can get your stuff. Your identity, your credit card numbers, your address, and so on. So what? Most of the time most bad guys aren't interested in You. You're probably broke and your stuff isn't that great anyways.
A photograph could in theory be used as a targeting aid. The beautiful girl can acquire stalkers just walking down the street. Amanda Smith as a name hanging in space is of no interest to creepers, but the beautiful girl who's walking down the street who we learn is named Amanda Smith, well, that's something. The young man with the Rolex watch might be good choice for burglary, and so on.
Now, people who are uncomfortable with having their picture taken "because, privacy" probably haven't thought it through this far. They probably have only a vague unsettled feeling, and they probably have some wrong-headed ideas. Like mine, you know, the one where I proposed that pictures lead to identity theft. Regardless, there are genuine risks underlying it, at least in a small way. Legitimate concerns, I would say.