This never made sense to me. Prior to Street View, at least two German companies did the same thing (photographing every street with essentially the same technology,and putting it online). Noone complained. Now that Google is doing it, it's suddenly a huge privacy nightmare. I just don't understand.
The other part is irrational fear. Fear that thieves will use 2 year old images to check out a house, fear that some potential employer won't hire them because you apartment complex looks shitty (Some Germans really like their house fronts - contrast that to the France that most don't care at all what it looks like from the outside, as ling as it's attractive from the inside).
So yes, it's a German thing.
One more thing: If a potential employer won't hire me, because the facade of the house i live in looks like a mess, I don't want to work for this employer. (The same thing is true for drunken Oktoberfest pictures on Facebook or whatnot.)
I can take a 2hr drive through suburbia and draw up a nice list of homes whose residents are unlikely to be in when I come by again in the evening.
/ german
If Germans were really more conscious of privacy then I suspect they'd be worried about this, but as previous posters have said it's more down to misinformation and exaggeration.