You can do this, but it doesn't get a great price/performance/practical camera.
I have made a start on this myself.
If you want a display on it (not essential) consider something with composite video input. Tiny cheap HDMI displays are hard to find.
See here:
http://www.raspberrypi-spy.co.uk/2012/1 ... cd-screen/
You will need a shutter button that you can hook up to GPIO.
A simple Python script will do to link the button to a call to raspistill.
It needs to generate a unique file name.
You might want other GPIO for a mode switch - camera / playback, and next/previous/delete buttons.
Shortcomings of the Pi camera as a compact digi-cam: -
1. No autofocus
2. No manual focus!
3. No zoom
4. No photo SD card. You can store on the SD, but you swap SD into a card reader.
5. Bulky, by the time you have added a battery pack,a screen, buttons and wired it all up it is getting big.
6. No flash.
It's an interesting enough project, but if you want a camera for typical use you are better getting something like this:
http://www.argos.co.uk/static/Product/p ... :c|adp:1o2