Setting aside the business model issues for a moment: I'm really intrigued by the idea of penis-recognition software. Now, that's a branch of AI I never even considered before, and already my mind is racing through the algorithmic approaches...
http://www.cs.hmc.edu/~fleck/naked.html
Some other people have worked on better skin classifiers:
http://www.computer.org/portal/web/csdl/doi/10.1109/CVPR.199...
http://portal.acm.org/citation.cfm?id=1240564
Looks like a hot topic. :)