You probably wouldn't use Instagram for taking all your photos.
On the iPhone at least, it only saves photos if you post them. You wouldn't be able to use it as a camera for private photos unless you didn't want to keep them.
There is one work around - you can get it to save the photo if the upload fails, so if you put your phone in airplane mode, you can take a private photo. Apart from that, Instagram only works as a sharing app, not a general camera. I think since it works this way, 99% of people won't care.
The Android version saves all the photos I've taken with Instagram locally. Of course I don't know whether there are copies of these images on their servers, not published to my public stream, as the app doesn't show anything like that.
It saves the local copy after you apply a filter, so at the same time it is uploaded but probarbly before the user is "finished" with the upload process (screen 2 after applying filter is to add a caption, and while that is happening the photo is uploaded).
But then again that is like writing erotic short stories in your twitter apps drafts and be outraged that they are saved online.
On the iPhone at least, it only saves photos if you post them. You wouldn't be able to use it as a camera for private photos unless you didn't want to keep them.
There is one work around - you can get it to save the photo if the upload fails, so if you put your phone in airplane mode, you can take a private photo. Apart from that, Instagram only works as a sharing app, not a general camera. I think since it works this way, 99% of people won't care.