That's a good question. There was a time when Las Vegas was awash with webcams, some of which were high quality. A prime example was the trio of cameras mounted at the Polo Towers, which offered high-quality color views panning the Strip, including the CityCenter construction site and Bellagio fountain show. Gone. (At least, as far as we know these are gone; you now have to have a username and password to log in to the new Diamond Resorts group website. The cameras may well have been owned by CityCenter and intended to be in place only while construction was ongoing).
Then there was the camera you mentioned outside Hawaiian Tropic Zone, itself supplanted by PBR: A Rock Bar. Gone.
MGM Grand cam? Gone. Imperial Palace and Casino Royale webcams? Both gone. Likewise the webcam on Fremont Street and the one previously poolside at the Hard Rock (the TruTV "Rehab" reality-TV series, itself since axed, probably put the kibosh on that one). Springs Preserve had a fun rooftop-mounted camera broadcasting live streaming video and you could pan, tilt, and zoom with that one. Gone, at least for the time being (apparently, there's some talk of relocating this camera, but don't hold your breath).
As to why all these webcams have disappeared, we can't say. Changes in ownership may account for some losses, but others are harder to explain, other than being one less expense to maintain during this troubled economy, perhaps? We never heard of any privacy issues rearing their heads.
So, at the time of this writing, the Las Vegas webcam situation is in a pretty sorry state, with the few working cameras we're aware of being those at the Boyd-owned properties around town (you have to sign up for free access to view these), the Silverton aquarium camera, backstage with the cast of Crazy Girls, and various traffic cams. Earthcam has three cameras streaming views of the pirate ship at TI, including two exterior angles and one interior one of the wedding chapel (someone was picking up trash when we logged on). If we're missing anything else noteworthy, please let us know.