The PlayStation Eye is the official PlayStation 3 USB digital camera, it is also the successor to the Eyetoy, the PlayStation 2 official camera.
While playing Burnout Paradise online, if a player takes down another, the taken down will have his picture taken and sent to the aggressor. This feature is the Mugshot, alternatively a player's picture is taken if he has finished first in an Online Race, has beaten a friend's Road Rule or takes down another player during an Online Race.
After first launching the game, your picture will be automatically taken as your driving license photo. You can retake the picture by navigating to the "Driver Details" of the Pause Menu.