Actually, the imac isight does reverse lettering, Duane.
Jon, the reason for this is that people are more accustomed to seeing themselves in a mirror, so if they see an unflipped image they think they look weird. So the isight gives you a mirror image. (If you think about it, when you watch yourself in a mirror walking into a room from the left, you see yourself coming in from the same side in the mirror, but your face and any writing you hold up to the mirror are reversed.)
EDIT If it bothers you, there's an Auto-flip Photos setting in photobooth.