How to Troubleshoot the Sony EyeToy

The Sony PlayStation EyeToy camera reacts to the person in front of it, allowing users to play EyeToy-specific games like EyeToy: Play and to add their own faces to games like Tony Hawk's American Wasteland (I won't be putting my ugly mug in any game!). The EyeToy is a sensitive accessory, so there are many problems that can arise when using the camera in a standard living room.

Step 1
Reset an EyeToy game if it is frozen. To reset an EyeToy game, cover the EyeToy's lens. The game will automatically reset to the main screen.

Step 2
Remove any moving objects that may be distracting the camera if it is having trouble focusing on you. For instance, if there is a birdcage in the EyeToy's field of view, the EyeToy will have a hard time distinguishing between your movements and the bird's.

Step 3
Turn on more artificial lighting in your room and shade the windows if the EyeToy's light is blinking red. The EyeToy reacts better to artificial light than organic light.

Source: PlayStation Knowledge Center: How Do I Troubleshoot an EyeToy USB Camera on the PlayStation 2 Computer Entertainment System?