We run ads on CL from time to time, but really only to drive people to our site and increase traffic. We're too expensive for what I call "The Garage Sale People" who typically frequent CL. Occasionally we'll get an inquiry, but rarely any business. I monitor our web traffic like crazy, and we always get plenty of hits from the ads (probably many from the other "Photographers" on CL, but that's ok - traffic is traffic).
Here are two ads we're currently running:
http://sandiego.craigslist.org/csd/bab/559549203.html
http://sandiego.craigslist.org/csd/crs/559550423.html
Two other points that I don't think have been mentioned in this discussion:
1. Keywords. Remember to use keywords in your title and in the body of the ad. If someone searches for "newborn photographer", are both of those words used in your ad? If not, then your ad won't come up. So be sure to use photographer, photography, photos, pics, pictures, portraits etc.
2. Duration of the ads. Depending on the city, the ads expire at different times. Here in San Diego, CL is very busy and our ads expire in just 7 days. We're also discussing this right now on my forum, and someone just posted that the ads in their city last 45 days, because their CL site is much slower. You don't get a notification when your ad expires, but obviously once it's gone, it's gone...so put up another one.
As for flagging...I put our maternity/newborn ad in the babies section all the time and rarely does it get flagged. I think when it does, it's other "Photographers" trying to eliminate their competition. But when I placed our Senior ad in the babies section, it was immediately flagged. Since the babies section is mostly mommies, as long as you don't tick them off you're usually ok. Of course all it takes is a few screwy "Photographers" to flag you and take you down.