It depends on the subject and the moment.
You definately can't be intimidated otherwise you'll loose many pictures like that...Of which I am just as guilty. I started getting up the nerve when I was in school and often I would tell people I was a student and it was cool, but the spontaneity is key a lot of the time and the trick to me is to get the image without someone noticing that your taking the picture. When people see a camera on them they often change their demeanor. That can be good if your staging your image or working with someone on a shoot. Some of my favorite pictures Ive taken with my little iZone. People didn't respond to it as they have with my Nikon less intimidating I think, more intimate.

But really you should read this...
Your Rights When Stopped or Confronted for Photography
http://www.krages.com/phoright.htm

so you what time it is when your out and about clicking away.
You'll find your technique, thats part of the fun of photography I think.
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"What people think of me is none
of my business."
~O. Winfrey

http://afeni.com/