> If you allowed free reign access to the sensors people could record the inside of your house/work, capture your face, fingerprints, retinal pattern etc.

Yes, yes they could. That's not and shouldn't be Apple's problem. That's your workplace's problem to regulate how the device is used on-site, the government's problem to regulate how it can be used in public, your household's problem on how it can be used in private, etc.

The device will be inevitably jail-broken anyways, so a walled-garden isn't going to stop bad actors.

Not to mention, most of the things you mentioned can already be accomplished with less expensive and much more subtle devices, like a standard digital camera. And those device definitely don't try to prevent abuse. (Imagine if your camera refused to take a picture because it thought you didn't have permission!)