I don't see the big deal...you can use your phone camera app, shoot a photo and share it instantly to facebook....what's the difference????? I've been doing that since last year on my first Android phone.
Count me in the "old" group, i have no idea what the appeal of this instagram is. Why would you want to take a photo then purposely filter it back to a 70's Polaroid is beyond me (having been someone to have used one).
I see the appeal for those who don't know anything about photography who want their photos to have a more "post production" or edgy look. But by no means does this make the user a real photographer. I've already seen my FB wall inundated with useless high contrast, washed out, grainy photos of people's cats and other such "artistic" expressions.
Yet again, I see no problem with the tool, but as usual I am afraid of the intentions of the user.
tl;dr: hipster cam
also WTF 17MB and no xfer to SD?!?!?