Truth be told asking permission and not asking permission gives very different results. So, I guess I should say sometimes I ask permission.. sometimes I don't. It really depends on what kind of picture I want to take.
When I'm walking around and I see an interesting character for a picture and I want to take a PORTRAIT of said subject, I'll almost ALWAYS ask permission. When a situation is unfolding in front of the camera (such as Wolfeye's scenario) I will almost NEVER ask for permission. Though frequently, I'll take the picture then ask permission for a second one.
My theory is as follows.. Most people don't mind (or don't notice) being photographed (I guess that's still a fair statement, though I do think things tend to change for the worst here). If I become aware that they are offended or uneasy in anyway I'll apologize, and if they're friendly, I'll explain and start some kind of conversation. If they become aggressive, verbal, and/or unpleasant, I'll just walk away. Honestly, it's just a dam picture, and it's not worth me hearing your opinions about my family members.
I had a situation once, where a friend was taking a picture of a street and on this street there was a stand and the stand owner saw it fit to lecture us (for an extended period of time) on the etiquette of picture taking. Claiming that we should have ask him permission first.. That when he was a photographer that was the first lesson they taught him.. bla, bla, bla.....
I'm sorry, these situations aren't analogues to "The costumer is always right". You don't know my art, you don't know what I'm doing. If you're interested, I'll explain it in detail. If you're not, I AM SINCERELY SORRY, now quit wasting my time, this light ain't gonna last forever!
I guess the best rule of thumb in these situations - Aim for physical integrity!

Good Luck!