Cameras are everywhere in public spaces, and most people wouldn't notice a password field wasn't obfuscated until they've already started typing. Defaulting to obfuscated seems the only sensible option.

But with a camera I can just see what you typed, with a fairly high accuracy.

Video, yes. Stills, seems less likely.

Are there /any/ digital cameras these days that only do stills?

No way. The number of reported cases of passwords being stolen simply by physical proximity is enough to make this a sensible default. I agree that there should be an option to show the password as you're typing or, at a minimum, once you're done typing (less secure) but making that the default is unreasonable.