Option C: a bit of both.
I’m a big fan of Flickr’s interesting photos from the last 7 days (in spite of its tendency to, after several reloads, threaten to reduce beauty to cliché: sunrises, snowy landscapes, raindrops in spiderwebs, cities at night, all vividly colored) and two of the ones featured were of raindrops.

“Across the Universe,” by Xarfa.

“Raindrops on playgrounds,” by Clodders.
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I’ve had a Flickr account for years for my personal photos, so the rest of this was easy for me. Here’s a photo of a display that the department manager made for Obama’s inauguration:

I think the library could easily use Flickr to store and tag photos of displays and events, so it could serve as both a tool for staff research and a tool for publicity.
Flickr could also work as a tool for patron research, as in the Library of Congress project where they uploaded a number of photos and allowed the public to tag them and comment on them. (This is a big improvement for the LoC, which has kept most of its photos in a clumsy database which stores session information its URLs, making it impossible to link to an individual photo.) The ACLD already has plans to place its Heritage Collection online with Flickr.
Right now I use Flickr almost exclusively; when I was on Blogger I used Picasa but disliked the clumsy process for actually getting the pictures into a post so I ditched it in favor of Flickr. It’s possible that Picasa’s user interface has improved since then but I haven’t gone back to it.
I have few worries about sharing photos online, either in terms of privacy or in terms of intellectual property. Most of my photos–and especially the ones of friends and family–are private, for friends and family only. These photos aren’t visible to the public or to search engines. The rest of the photos are public and I’ve used the most lenient Creative Commons license for those that I can (it requires attribution, nothing more).
Today I searched on my screen name to see if any of the photos were being used anywhere, and it turns out that they are–different sites are using photos I’ve uploaded of statues, of Castle Neuschwanstein, of the odd construction of a German toilet, and of abandoned bikes all over campus. I think it’s great that people find the photos useful, and the Creative Commons licensing strikes me as much more in line with the original intention of copyright than what the copyright laws have devolved into.
Today it’s generally cost-prohibitive, if not impossible, to produce and legally distribute any sort of independent creative work engaging with other cultural works produced after 1923. This difficulty/impossibility strikes me as fundamentally at odds with the progress of the arts and sciences especially given the number and importance of historical developments since then (women in the U.S. had just been granted the right to vote; desegregation was 40 years down the road; almost all of the acknowledged film classics were filmed after 1923; blues and jazz were in their infancy; rock, R&B, and hip hop hadn’t yet been invented….) And I fear that I’ll never understand how continuing copyright protection after the author’s death serves as any inducement for that author to continue producing work.
At any rate, the assignment was to familiarize myself with Flickr and then to write about it … Mission Accomplished.
/swaggers off in a flight suit