I have Instagram on my iPhone, I have fun with it, and I don't intend to stop using it b/c of FB's buyout. But I don't understand what it does for FB and why they would pay $1 billion for it. Wouldn't it be a lot cheaper to pay like $50 million (probably less) for a couple of good developers to make a similar product? It's not like Instagram invented filters. And if it's for the users, well I suspect the vast majority are already FB users so what's the point?
Guess this is why I'll never be a Mark Zuckerberg, but I don't see how Instagram was a smart acquisition. For potential investors, this should raise a big red flag.
EDIT: SmugMug is a LOT smaller than FB and managed to make a pretty cool photo app - Camera Awesome. And what I think is a very useful and underrated app is Photosynth. Probably because a certain company "whose name shall not be spoken" made it.