It's weird this topic comes up as I've just started working on this. I'm working on a weather station that will be permanently fixed outside, up a TV antenna tower. It's been working great over wifi and now I want to add a camera to catch shots of the sunset or whatever. So I came across this serial camera http://www.cutedigi.com/product_info.php?products_id=4355&osCsid=7d594b2622cb1511c125342c5ba61fe3 It compresses an image into a jpeg and sends it over serial interface (Dig0+1) to the arduino. The compressed image appears to be about 12,000 bytes, so you could either save it (Dataflash

) or send it off right away, packet by packet. I kinda want to send it right away. I've heard of people getting .75-1fps easy from it so you shouldn't have a problem getting one every 5 seconds. The cams cheaper than others, but you have to bypass or remove the rs232 chip to bring the levels down to 0-5v for arduino. No biggie though. I've been working with it for a few days so I'll see what I can come up with on the software side.
As far as pan/tilt, like greg said, you could use a little servo but I have no experience with that.
---Jared