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^ You need to 'hold' the button til the haptic feedback kicks in... then you should here some clicks and the camera will open. It's a long press.... not just a quick click.
If you go into Handcent > settings > and scroll down to the bottom where there are the 'quick compose' settings, there is a check box for "trigger camera button"... make sure it's unchecked.
edit: lol.... apparently Chomp SMS has the same setting as Handcent... good to know for future reference however. Glad you figured it out.