No it does not get activated when turning on FaceTime or Photo Booth.
No guarantee but worth a try:
1. Close all the applications that are using the camera (such as FaceTime and Skype).
2. Open a terminal (Launchpad -> Terminal).
3. Type the following command:
sudo killall VDCAssistant
4. Re-open your application. You should see that the camera is working now.
... assuming the camera shows up in Systemprofiler/USB