First let me explain the concept before I give my 2 cents:
The idea here is you take a photo with your iPhone's camera and upload it to a central server that will, in turn, hand you back someone else's random photo that they just took and uploaded only moments ago as well. And what to do you get for your photo? Well, that's the mystery and the attraction of Photoswap for many.
A semblance of a conversation can be created by using the "reply" button which will allow you to reply directly to the last photo sent to you. Additional communication can be achieved by handwriting or typing on a screen then sending that as a photo (there are a lot of requests for boobs this way). You ay optionally provide your identity and location if you wish, a limited number do, most use nicknames or handles.
I've been using Photoswap for about a week now with mixed feelings. There's the inherent curiousity about this somewhat voyeuristic method of communication, but then there are the endless series of feet and leg photos to wade through between anything relatively interesting, and I'm not just talking about skin, just anything that is more than what is within arms reach of the sender.
There are a few flickr groups dedicated to interesting pictures found with Photoswap and even a dedicated one to NSFW pictures. There seems to be a large community of users but you either love the app or hate it. I am still enjoying it, but it is something you can do to kill time, if you're in an interesting place or at least have something interesting to share.
One thing I've noticed is that nearly everyone seems to avoid showing their face. I've sent it a few times and you definitely get more responses, I even got ratings from three people using their hands, which was quite amusing.