I have this problem myself. I love doing street shoots, not necessarily as part of any project, but I just like to shoot whenever I think something looks interesting or pretty/cool etc.
I am shy to approach, and the few times I tried to, I got negative responses more than positive... which has made me even more skeptical about approaching random people in the street. There was a time when I was trying to shoot random shoppers in a flea market, and the girl I was with told me it was creepy (even though I wasn't taking her pictures... just watching me shoot made her uncomfortable)...
I wish there was an easy answer to it... I may look like a creepo or a stalker at times, but I guess you just have to accept that about yourself when shooting random street shots, and just be bold about it.