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My green led is on indicating that the built-in iSight camera is on, but I can't shut it off and apps like Photo Booth, Image Capture and iMoive won't recognize its existence.
If you do "Restart" the little green led indicating the camera is on never shuts off. But if you shut down and then restart...all is well. I don't know what caused it, but it's up and functioning now.
Some of the asset retrieval software pieces (wish I could remember which) use the iSight to take images of a supposedly "stolen" system -- if you have one of these installed, it may be misconfigured or maybe you nicked your laptop!!!