some more info:

media-libs/libgphoto2 
Installed versions:  2.4.1(21:54:53 28.05.2008)(exif hal kernel_linux nls -cameras_adc65 -cameras_agfa_cl20 -cameras_aox -cameras_barbie -cameras_canon -cameras_casio_qv -cameras_clicksmart310 -cameras_digigr8 -cameras_digita -cameras_dimagev -cameras_dimera3500 -cameras_directory -cameras_enigma13 -cameras_fuji -cameras_gsmart300 -cameras_hp215 -cameras_iclick -cameras_jamcam -cameras_jd11 -cameras_kodak_dc120 -cameras_kodak_dc210 -cameras_kodak_dc240 -cameras_kodak_dc3200 -cameras_kodak_ez200 -cameras_konica -cameras_konica_qm150 -cameras_largan -cameras_lg_gsm -cameras_mars -cameras_mustek -cameras_panasonic_coolshot -cameras_panasonic_dc1000 -cameras_panasonic_dc1580 -cameras_panasonic_l859 -cameras_pccam300 -cameras_pccam600 -cameras_polaroid_pdc320 -cameras_polaroid_pdc640 -cameras_polaroid_pdc700 -cameras_ptp2 -cameras_ricoh -cameras_ricoh_g3 -cameras_samsung -cameras_sierra -cameras_sipix_blink -cameras_sipix_blink2 -cameras_sipix_web2 -cameras_smal -cameras_sonix -cameras_sony_dscf1 -cameras_sony_dscf55 -cameras_soundvision -cameras_spca50x -cameras_sq905 -cameras_stv0674 -cameras_stv0680 -cameras_sx330z -cameras_template -cameras_toshiba_pdrm11 -doc)
kde-base/kamera (3.5) *3.5.9

can't change the typo in the bug title, sry

this camera is mass storage, it does not need libgphoto2.

Oder libgphoto2 versions (before 2.4.1) incorrectly detected it as libgphoto2 supported camera.

Btw, if the system freezes hard -> its a kernel or X problem, not a libgphoto2 problem

system hang -> cannot be caused by libgphoto2, but most likely are kernel bugs.

sorry for being unclear:
the USB (Sub)system never completes detecting the usb cam so its no complete freeze as interpreted.
Even though the cam is mass storage type, i still consider it a bug (in the kamera ioslave or libgphoto, don't know) that i can't use my cam with this kioslave installed.

what does

gphoto2 --auto-detect 

say?

some output:

$ gphoto2 -v
gphoto2 2.4.1

Copyright (C) 2000-2006 Lutz Müller und andere

gphoto2 comes with NO WARRANTY, to the extent permitted by law. You may
redistribute copies of gphoto2 under the terms of the GNU General Public
License. For more information about these matters, see the files named COPYING.

Diese Version von gphoto2 benutzt die folgenden Softwareversionen und Optionen:
gphoto2         2.4.1          x86_64-pc-linux-gnu-gcc, popt(m), exif, cdk, no aa, no jpeg, readline
libgphoto2      2.4.1          x86_64-pc-linux-gnu-gcc, ltdl, no EXIF
libgphoto2_port 0.8.0          x86_64-pc-linux-gnu-gcc, ltdl, USB, serial without locking

$ gphoto2 --auto-detect
Modell                         Port
----------------------------------------------------------
Panasonic DMC-LC1              usb:


(its a lumix lx-2 though)

 gphoto2 -a
Fähigkeiten für Kamera           : Panasonic DMC-LC1
Unterstützung für seriellen Port : Nein
USB-Unterstützung                : Ja
Aufnahme machen (Auswahl)        :
                                 : Aufnahme wird nicht durch Treiber unterstützt
Konfigurationsunterstützung      : Nein
Unterstützung für das Löschen einzelner Bilder: Ja
Unterstützung für das Löschen aller Bilder   : Nein
Unterstützung für Bildvorschau   : Ja
Unterstützung für Bildhochladen  : Ja


# lsusb
Bus 001 Device 001: ID 0000:0000
Bus 002 Device 004: ID 04da:2372 Panasonic (Matsushita) Lumix DMC-FZ10 Camera
Bus 002 Device 002: ID 046d:c00e Logitech, Inc. M-BJ69 Optical Wheel Mouse
Bus 002 Device 001: ID 0000:0000

I can confirm same bug on my computer. Here is my info.

pikmin ~ # lsusb
Bus 002 Device 003: ID 04da:2372 Panasonic (Matsushita) Lumix DMC-FZ10 Camera
Bus 002 Device 002: ID 0d8c:000c C-Media Electronics, Inc. Audio Adapter
Bus 002 Device 001: ID 0000:0000
Bus 001 Device 001: ID 0000:0000

pikmin ~ # dmesg | tail -n 5
usb 2-6: new full speed USB device using ohci_hcd and address 3
usb 2-6: configuration #1 chosen from 1 choice
scsi4 : SCSI emulation for USB Mass Storage devices
usb-storage: device found at 3
usb-storage: waiting for device to settle before scanning

Camera is Panasonic Lumix DMC-FZ8. It stoped working after upgrading from 3.5.7 to 3.5.8 and it dosent work in 4.0.x either (maybe because I had 3.5 installed too?). After removing kamera and reloging to KDE session camera works again. With kamera installed I can connect to camera with just loging out of KDE session to login screen, as soon as I'm back in KDE connection is lost.
I'm positive is not kernel problem, I tested on various versions and confgis, including on one that used to work before 3.5.8.

Same problem here with Panasonic DMC-TZ5 and KDE 3.5.9/Gentoo.  With kamera installed, there are no /dev/sda devices created.  An icon appears "USB Mass Storage" but clicking on it pops up a konqueror window for media:/camera that eventually gives the error "Unknown error code 50".

Un-emerging kamera fixes the problem. There are 2 icons created, "USB Mass Storage" and "8.1G Removable" but I can mount the latter after a couple changes to udev and fstab.  There are some errors in syslog when the camera is mounted:

Jul  4 12:17:30 knock usb-storage: device scan complete
Jul  4 12:17:30 knock attempt to access beyond end of device
Jul  4 12:17:30 knock sda: rw=0, want=15758336, limit=15758335
Jul  4 12:17:30 knock printk: 10 messages suppressed.
Jul  4 12:17:30 knock Buffer I/O error on device sda1, logical block 1968767
Jul  4 12:17:30 knock attempt to access beyond end of device

But that doesn't seem to prevent me from downloading the images in digikam- note that accessing the drive as USB drive seems *much* faster than using PTP.

Ideally there would be a way to tell kamera to only use USB drive (and only create 1 icon).

*** This bug has been confirmed by popular vote. ***

I just released libgphoto2 2.4.3, which suppresses the last of the 0x2372 USB product ids.