I knew nothing about this until I read it here - but I think it's an intriguing case. I can see both peoples perspectives but ultimately I think Lorca Di Corcia is in the right - although I think it's a shame that it has come down to this.
If we are to document our world and to capture an essence of truth (which admittedly I am unsure photography can do) then people need to be able to take images of people without knowing. I am not sure that Lorca Di Corcia is a good example of a truth in photography as his images are so extremely orchestrated - where as the works of Diane Arbus and Weege are much more dynamic and are a testament to why Lorca Di corcia has to win the case. I feel this case is more an instance of sour grapes on behalf of thesubject of the photo than an issue of privacy (from the little I've read) and hopefully will be thrown out of court with the contempt it deserves. If we are to leave any kind of a legacy behind of what this century was like then people need to keep on being able to catch those rare real moments in life.
Having said this though I think the sticking point comes when people try to define privacy and what is acceptable and unacceptable - and this is where I am as lost as the next person. I just couldn't determine it.