I bought the Hipstamatic app for my iPhone and have been using it quite a lot. Of course any of these photo effects novelties can wear thin very quickly, especially when over used or used on bad subject matter.
One good thing in terms of taking actual pictures is how slow the thing is! You can probably take one image every 30 seconds or so, this means you have to get it right first time and such slowness should make you a little more considerate about what you photograph.
I find photographing the kids with it is great, the issue of time and the style of the images you take mean you don’t feel compelled to have them smiling and so avoid the cheesy grins or play acting.
You have to be very careful with the light; I find any direct source, sun or otherwise renders the effect ineffective, instead you need to find the indirect light that is bright enough but within a limited gamut.