Sometime back, a student posted video clips of the infamous DPS MMS scandal on the Bazee website (now part of ebay India) and that led to the arrest of the CEO because of flaws in Indian cyber laws.
But that was just a tip of the iceberg. With prices of computer webcams and camera phones equipped with video cameras coming down, YouTube and other video sharing sites were flooded with MMS videos that are often shot with hidden cameras and often without permission.
And since these clips fall under the category of "user generated content", there's little one can do to get such content removed from the Internet. Also, the mobile service provider, web-hosting company, ISPs, search engines and cyber cafes cannot be held liable for serving these videos.
But MMS videos are not all about voyeurism. For instance, filmmaker Nandy used MMS clips in a creative way to promote one of his Hindi films on mobile phones.
The other angle is money (or advertising dollars). You may have come across mms clips of some Indian actresses like Mallika Sherawat, Katrina Kaif, Preity Zinta, Riya Sen, etc. on YouTube - they aren't real but here's how the content creators make money from these these videos:
They morph these photos of Indian girls with nude videos of Hollywood actresses and post a portion of them onto YouTube. The YouTube video has links to the site (like rapidshare) where people can download the full clip. When people visit these download sites, they are served ads and that's how pranksters are able to monetize fake video clips.