App and photo editor
1. I never load my DSLR pics on to my iPhone with the intent to edit with Instagram. In my opinion, Instagram is meant for "iPhoneography" and I think the photos should be exclusively taken with the iPhone. I think it's safe to say that, in general, others think the same.
You'd be surprised how how good the iPhone 4 and 4S photos can be, especially when edited. Tilt shift effects give the illusion of shallow depth of field - something you see often in photos taken with DSLRs.
2. No, I don't. We live in a world where putting picture on the internet is the norm. Legally speaking, you are the copywrite owner of the photograph and have full rights to posting them where you wish. However, if you feel that as a friend, you need to ask them first, that's up to you. The only time I will ask is when it's of a friend's child. Some people don't want photos of their children on the internet and I think it's my job, as their friend, to respect that.