I'm seeing the same issue.  Here's kernel version and strace output when trying to run webcam-server.  Let me know if I can help further.

$ uname -r
2.6.28-11-generic

$ strace webcam-server
execve("/usr/bin/webcam-server", ["webcam-server"], [/* 23 vars */]) = 0
brk(0)                                  = 0x893f000
access("/etc/ld.so.nohwcap", F_OK)      = -1 ENOENT (No such file or directory)
mmap2(NULL, 8192, PROT_READ|PROT_WRITE, MAP_PRIVATE|MAP_ANONYMOUS, -1, 0) = 0xb7fad000
access("/etc/ld.so.preload", R_OK)      = -1 ENOENT (No such file or directory)
open("/etc/ld.so.cache", O_RDONLY)      = 3
fstat64(3, {st_mode=S_IFREG|0644, st_size=70187, ...}) = 0
mmap2(NULL, 70187, PROT_READ, MAP_PRIVATE, 3, 0) = 0xb7f9b000
close(3)                                = 0
access("/etc/ld.so.nohwcap", F_OK)      = -1 ENOENT (No such file or directory)
open("/usr/lib/libjpeg.so.62", O_RDONLY) = 3
read(3, "\177ELF\1\1\1\0\0\0\0\0\0\0\0\0\3\0\3\0\1\0\0\0\20'\0\0004\0\0\0"..., 512) = 512
fstat64(3, {st_mode=S_IFREG|0644, st_size=140900, ...}) = 0
mmap2(NULL, 143684, PROT_READ|PROT_EXEC, MAP_PRIVATE|MAP_DENYWRITE, 3, 0) = 0xb7f77000
mmap2(0xb7f99000, 8192, PROT_READ|PROT_WRITE, MAP_PRIVATE|MAP_FIXED|MAP_DENYWRITE, 3, 0x21) = 0xb7f99000
close(3)                                = 0
access("/etc/ld.so.nohwcap", F_OK)      = -1 ENOENT (No such file or directory)
open("/lib/tls/i686/cmov/libpthread.so.0", O_RDONLY) = 3
read(3, "\177ELF\1\1\1\0\0\0\0\0\0\0\0\0\3\0\3\0\1\0\0\0PI\0\0004\0\0\0"..., 512) = 512
fstat64(3, {st_mode=S_IFREG|0755, st_size=116920, ...}) = 0
mmap2(NULL, 98792, PROT_READ|PROT_EXEC, MAP_PRIVATE|MAP_DENYWRITE, 3, 0) = 0xb7f5e000
mmap2(0xb7f73000, 8192, PROT_READ|PROT_WRITE, MAP_PRIVATE|MAP_FIXED|MAP_DENYWRITE, 3, 0x14) = 0xb7f73000
mmap2(0xb7f75000, 4584, PROT_READ|PROT_WRITE, MAP_PRIVATE|MAP_FIXED|MAP_ANONYMOUS, -1, 0) = 0xb7f75000
close(3)                                = 0
access("/etc/ld.so.nohwcap", F_OK)      = -1 ENOENT (No such file or directory)
open("/lib/tls/i686/cmov/libc.so.6", O_RDONLY) = 3
read(3, "\177ELF\1\1\1\0\0\0\0\0\0\0\0\0\3\0\3\0\1\0\0\0\260l\1\0004\0\0\0"..., 512) = 512
fstat64(3, {st_mode=S_IFREG|0755, st_size=1319364, ...}) = 0
mmap2(NULL, 4096, PROT_READ|PROT_WRITE, MAP_PRIVATE|MAP_ANONYMOUS, -1, 0) = 0xb7f5d000
mmap2(NULL, 1329512, PROT_READ|PROT_EXEC, MAP_PRIVATE|MAP_DENYWRITE, 3, 0) = 0xb7e18000
mprotect(0xb7f56000, 4096, PROT_NONE)   = 0
mmap2(0xb7f57000, 12288, PROT_READ|PROT_WRITE, MAP_PRIVATE|MAP_FIXED|MAP_DENYWRITE, 3, 0x13e) = 0xb7f57000
mmap2(0xb7f5a000, 10600, PROT_READ|PROT_WRITE, MAP_PRIVATE|MAP_FIXED|MAP_ANONYMOUS, -1, 0) = 0xb7f5a000
close(3)                                = 0
mmap2(NULL, 4096, PROT_READ|PROT_WRITE, MAP_PRIVATE|MAP_ANONYMOUS, -1, 0) = 0xb7e17000
set_thread_area({entry_number:-1 -> 6, base_addr:0xb7e176c0, limit:1048575, seg_32bit:1, contents:0, read_exec_only:0, limit_in_pages:1, seg_not_present:0, useable:1}) = 0
open("/dev/urandom", O_RDONLY)          = 3
read(3, "d\256\275", 3)                 = 3
close(3)                                = 0
mprotect(0xb7f57000, 8192, PROT_READ)   = 0
mprotect(0xb7f73000, 4096, PROT_READ)   = 0
mprotect(0xb7f99000, 4096, PROT_READ)   = 0
mprotect(0xb7fcb000, 4096, PROT_READ)   = 0
munmap(0xb7f9b000, 70187)               = 0
set_tid_address(0xb7e17728)             = 24489
set_robust_list(0xb7e17730, 0xc)        = 0
futex(0xbf8c9bc0, FUTEX_WAKE_PRIVATE, 1) = 0
futex(0xbf8c9bc0, 0x189 /* FUTEX_??? */, 1, NULL, bf8c9bd0) = -1 ENOSYS (Function not implemented)
rt_sigaction(SIGRTMIN, {0xb7f62340, [], SA_SIGINFO}, NULL, 8) = 0
rt_sigaction(SIGRT_1, {0xb7f62820, [], SA_RESTART|SA_SIGINFO}, NULL, 8) = 0
rt_sigprocmask(SIG_UNBLOCK, [RTMIN RT_1], NULL, 8) = 0
getrlimit(RLIMIT_STACK, {rlim_cur=8192*1024, rlim_max=RLIM_INFINITY}) = 0
uname({sys="Linux", node="pantyninja", ...}) = 0
brk(0)                                  = 0x893f000
brk(0x8960000)                          = 0x8960000
rt_sigaction(SIGPIPE, {0x1, [PIPE], SA_RESTART}, {SIG_DFL, [], 0}, 8) = 0
rt_sigaction(SIGALRM, {0x1, [ALRM], SA_RESTART}, {SIG_DFL, [], 0}, 8) = 0
socket(PF_INET, SOCK_STREAM, IPPROTO_IP) = 3
setsockopt(3, SOL_SOCKET, SO_REUSEADDR, [1], 4) = 0
bind(3, {sa_family=AF_INET, sin_port=htons(8888), sin_addr=inet_addr("0.0.0.0")}, 16) = 0
listen(3, 5)                            = 0
open("/dev/video0", O_RDONLY)           = 4
ioctl(4, EXT2_IOC_GETVERSION or VIDIOCGCAP, 0x893f10c) = 0
ioctl(4, SONYPI_IOCSBLUE or VIDIOCGWIN, 0x893f148) = 0
ioctl(4, VIDIOCGPICT, 0x893f168)        = 0
ioctl(4, VIDIOCGMBUF, 0x893f178)        = -1 EINVAL (Invalid argument)
ioctl(4, SONYPI_IOCGBATFLAGS or VIDIOCSPICT, 0x893f168) = -1 EINVAL (Invalid argument)
dup(2)                                  = 5
fcntl64(5, F_GETFL)                     = 0x2 (flags O_RDWR)
fstat64(5, {st_mode=S_IFCHR|0620, st_rdev=makedev(136, 3), ...}) = 0
mmap2(NULL, 4096, PROT_READ|PROT_WRITE, MAP_PRIVATE|MAP_ANONYMOUS, -1, 0) = 0xb7fac000
_llseek(5, 0, 0xbf8c99f8, SEEK_CUR)     = -1 ESPIPE (Illegal seek)
write(5, "ioctl (VIDIOCSPICT): Invalid arg"..., 38ioctl (VIDIOCSPICT): Invalid argument
) = 38
close(5)                                = 0
munmap(0xb7fac000, 4096)                = 0
write(2, "error setting video device param"..., 54error setting video device parameters, using defaults
) = 54
ioctl(4, EXT2_IOC_GETVERSION or VIDIOCGCAP, 0x893f10c) = 0
ioctl(4, SONYPI_IOCSBLUE or VIDIOCGWIN, 0x893f148) = 0
ioctl(4, VIDIOCGPICT, 0x893f168)        = 0
ioctl(4, VIDIOCGMBUF, 0x893f178)        = -1 EINVAL (Invalid argument)
ioctl(4, SONYPI_IOCGBATFLAGS or VIDIOCSPICT, 0x893f168) = -1 EINVAL (Invalid argument)
write(2, "ioctl (VIDIOCSPICT): Invalid arg"..., 38ioctl (VIDIOCSPICT): Invalid argument
) = 38
write(2, "not a valid video device? quitti"..., 36not a valid video device? quitting.
) = 36
exit_group(1)                           = ?