I take all of my food photos with one of three cameras. The bowl of peaches (and one apricot) was shot with each camera under the same daylight conditions, from the same angle, using the Auto setting on the cameras. (On the camera phone there is only an Auto setting.) Each is reduced in size to 400 pixels wide at a 72 pixels/inch resolution, but otherwise I've left each photo untouched by Photoshop or any other image editing software.



Here are some more food photos shot with the W800i, or the K750i which has similar camera capabilities, in indoor/low-light conditions:
Through the glass of a display case indoors
Taken at dinner in a restaurant (indoors, incandescent light)
Taken indoors at a market (flourescent lights)
When I'm shooting food at home, I now use the D70s exclusively. However it's a big camera that's very obvious, especially when using the zoom lens. It also has one of the loudest shutters I've ever heard.
That being said, whenever there is any doubt I ask if I may take photos, especially at a restaurant. Most of the time there hasn't been a problem, and I just pull out the chunky D70s and shoot away. In certain situations though, you want to be more discreet, out of courtesy to other diners at a quiet restaurant for example. In such cases, I go for the Coolpix or theW800i camera phone. The Coolpix still takes better pictures, but the phone is the most discreet of course (you can pretend to be looking at something on the screen while you shoot away).
When shooting discreetly, the first thing to remember to do is to turn off the auto-flash. You should never use a flash when shooting food indoors anyway for picture quality reasons, but a flash is very distracting and annoying. The sound of the shutter can be as distracting and attention-getting as a camera flash; fortunately the Coolpix has a silent shutter, though the zoom lens makes a whirring sound when it's in action. The W800i has a loud digital shutter sound, which can be turned off by activating Silent Mode. If you are in the market for a new camera, test out the shutter sound.
Sometimes an establishment will simply tell you not to take pictures, period - this happened to me in the Globus department store when I was researching my Food Destinations [1] article. If that happens I stop taking photos and don't post them on my site either. As I've already stated, it's pretty rare that people tell me to stop shooting. (If you are Asian like me, telling the waiter you are genetically incapable of not taking photos may help. Sort of kidding, but it did actually work for me once.)
Some people, such as market stall vendors, are simply camera shy; if that's the case just focus your lens on their products. Including the people who brought you that food experience in your photos is always nice though.
[Update:] L at Still Life With... [2] has posted a terrific article [3] about how to improve those low-light photos you take at restaurants and such with Photoshop.
Links:
[1] http://www.justhungry.com/2006/05/food_destinatio_2.html
[2] http://stilllifewith.com
[3] http://stilllifewith.com/2006/06/22/lemonade-from-lemons-photoshop-help-for-low-light-photos/
[4] http://www.technorati.com/tag/food photography
[5] http://www.technorati.com/tag/nikon d70s
[6] http://www.technorati.com/tag/restaurants
[7] http://www.technorati.com/tag/sony ericsson w800i