There were some cool tech demos that exploited the camera rather impressively - facial recognition for one, but all of these are technological curiosities rather than mass-market useful. There was never a use case that seemed relevant to the everyday user where the camera was really all that useful.
I do think the camera contributed substantially to the failure of the product. More than the existence of the camera was how it was handled - no record/activity light as has been customary on many such devices, and the design of it felt viscerally like a hidden camera.
Which isn't to say Google intended to create a hidden camera, but in trying to make it blend and look like normal glasses it made the camera seem less upfront, more dishonest, and more intrusive than, say, a guy who is literally wearing a camera on his head.
Too bad it didn't have many other uses, and made being out in public kind of awkward.
The press made a big deal of the camera creeping people out, but in practice, the reaction was much more curiosity and interest than fear. I think the press just wanted something to write about, and in the absence of revolutionary abilities and interesting use cases, they wrote about its perceived flaws and did a bit of fear mongering.
The only real use for Glass was a HUD + low quality camera, considering the positioning of the actual display. You don't need a camera for a HUD. Now if Glass went after augmented reality, then I'd totally agree with you.