Moral of the story is to read up on your local RC rules - they may well prohibit any flying close to people.
Australia is one of the leaders in terms of regulatory coverage, but there are still restrictions on rec use - not over populated areas, not within 30 metres of people etc. It does mean that the guys flying AR.Drones in the carpark outside my office were strictly in breach of the CASA regs!
I'm assuming most countries allow recreational flying, but generally assume you wont be doing it in town.
I think a reasonable rule of thumb is "would you play cricket where you're about to fly?"