Same here...I'm still timid of taking shots of people.
If you engage with them instead of taking 'sneaky' shots, they tend to pose for the camera which is not really 'candid'
Like anything else, it takes practice, practice, practice.
I had a nasty experience on a fairground this year so like Marcel, I make it obvious I'm pointing the camera away from kids and even switch it off if someone is watching me suspiciously.
I think there is a link on here somewhere to UK Photographers Rights...I carry a few copies in my bag along with business cards with my gallery and email address to hand out.
If you get any hassle you can always tell them to p!ss off, your'e from Mi5 and theyr'e blowing your cover