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Doesn't seem like much work at all to me, compared to creating random users.

Then again, maybe it's just me that isn't creative enough to be able to come up with names other than "Test User", "Another User", "Somebody Else", etc. :-p

There is a library called Faker that can do this for you. It exists for perl, ruby, php and probably other languages.

I am interested in where do this pictures come from? Did these people give their permission to be used like this?

If you scroll to the bottom of the page you can see he got them from Greg Peverill-Conti's 1,000 faces project, which is licensed under Creative Commons BY-NC-SA 2.0,

I don't think so; it's pretty trivial to decode the JSON and make it a native object/array/whatever in almost any programming language.

So far I always did a "user[count]" or "user[timestamp]" thing and it was time consuming, dull and most of all didn't do the best job at presenting the app to the clients.

For simple placeholders you can use a client-side templates engine and pass it the JSON directly.

Beyond 3 or 4 fake users, I think you'll soon realise how difficult it can be to be a) motivated, and b) original.