My cats don't wear collars (two of them won't even tolerate the things), and they don't go outside except to wander on the balcony, so this project wouldn't be interesting at all in my house. It is pretty funny, however, in the original house: It's Mr. Lee's CatCam.
Seems a German guy was curious about where his cat went during a day, so he affixed a modified keychain digital camera to his cat's collar with a timer set to take a photo every few minutes. I've been very curious about some of my cats' antics, but I think I'd be more inclined to set up a CCTV-type camera before I'd go to this length. But hey, if I had the technical know-how, who knows? I just might have three cats running around with cameras on their necks.
(Thanks to Alessandro for that link!)