The reality is that taking pictures of people on the street is not illegal in any way. I think most people will be ok with it if you are using film. Most people in this age don't think something is real if they can't see it on a computer, so if it's a film camera, they will probably be ok with it. I'm also a shy person, but i'm not into documentary/street photography much, so i don't do it. But if i did, i would use a long lens from across the street or something, especially in a bad neighborhood. My dad is an old news photographer, so he is very good at approaching people and taking their picture. Typically he just takes the photo then walks up to them and tells them whats up, it usually works for him. If you can use a really cool old camera (a RF or TLR) then people will be further un-suspect of anything.
-Austin