Level 6
nah jks, i think it was planned for when ingame xmb was first introduced, but it was probably all too hard, especially for online, and in offline games it would be hard to remove the pause menu. so i think it was probably the best decision not to have it, though i would be a keen user of it if it was introduced
Insomniac did it for Resistance: Fall of Man 3 years ago. Studio Liverpool did it for Wipeout. Naughty Dog did it for Uncharted 2. I can't see why others can't follow suit.
Level 4
Motorstorm: Pacific Rift was another one that let you take in game screenshots. I loved the ability to move the camera around to find the best angle. Unfortunately it was only for the single player modes.
The R:FOM screenshots were a bit clunky and hard to get action shots cos it required you to press a button on a keyboard whilst also trying to work the controller (The Big toe worked alright here 
) But at least it let you take screens whilst playing online
Those Just Cause 2 Vids sound cool, maybe Devs should try to implement something like the system in the SKATE series? Where its constantly recording your actions and you can "pause" and edit the clip any time you like. That would be an awesome addition to all of our favourite games and would make sharing those in game moments of brilliance (or stupidity) much easier.
EA keep the copyright license and host the content online.
Rockstar do the same.
Sony tiles export content to the XMB from there in game library Normaly
Atari titles export direct to XMB.
Just a few examples.
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