It has a light on the front that comes on if the camera is active. Do you think most of the people who were uncomfortable were unaware of that, or didn't trust that people using it wouldn't disable the light?
The former would make a lot of sense to me. That it has a camera is obvious, and knowing how the light works requires a modicum of research. The latter, not so much, as we're back in the realm of secret recording.
One might argue that people should get used to that, and at some point they probably will, but turns out it's a somewhat more difficult task trying to adapt people to your product than vice versa.