Busking etiquette - quite a contentious subject as evidenced by the variety of opinions.
I guess I'll wade in. I've busked for 33+ years and mostly in one city. It probably gives me a different slant than someone who moves around. I bet most cities have established buskers and they will have their own "rules" or "etiquette".

Here in Victoria, where I busk, we didn't have any rules when I started but there were only a few regulars and space for everyone (if not very good monetary return). Over the years the number of buskers grew and grew until the city got involved and made us get licenses and agree to certain rules (mostly good common sense ones - no amps, one busker per block, 2 hour sets then move etc). By the year 2000 we had 600+ licenses! There were lineups for the better spots daily. We had a system whereby the first busker at the pitch could claim any 2hour time block but couldn't busk elsewhere while "holding a time slot". You had to at least leave something as a place holder and were expected to be back well before your alloted time. It mostly worked quite smoothly although sometimes there was bitterness between buskers wanting the same spots/times. Waits of eight hours weren't uncommon for some spots/times. So that part was hard. But still, it worked/works to this day. We have two busking areas with different licenses now and as one of them is auditioned yearly and has a higher fee, it is governed differently with a weekly schedule and seniority. Luckily, there aren't 600 licensees anymore!

I look on busking as akin to being a "goodwill ambassador" for your city. I try to be informative, answer questions, refer tourists to restaurants/entertainment etc.
- Obviously things like swearing are verboten - just don't do it! It just reinforces many people's bad ideas about buskers.
- Spitting, throwing cigarette butts and garbage are other no-nos. Use garbage cans - it's common sense but you'd be surprised!
- Fighting amongst buskers does happen but we always try to stay civil.
- Staying well away from others performances while waiting is the rule. People are ready to see the worst when it comes to buskers and it is up to us to improve their opinion/educate them.
- Speaking of education, I try to give some historical context to the material I play (lots of old blues/hillbilly/folk) telling a bit about the song/artist. I find this helps draw in a lot of people and adds to my show.
- Humour is obviously a great addition to any performance but I steer clear of racial and potentially off-colour jokes or putdowns. There's enough of that on TV. Buskers play to a wider spectrum of people than anyone and I try to keep that in mind - How will this influence kids? What would my grandparents think?

The public can be ignorant at times but I try to react in a positive way. When people interrupt my performance mid-song I try to say, "I'll be finished in a moment" or "I can only do so much at once" (I'm a one man band) although I must admit I'll stop mid-song to sell a CD, usually making a joke out of it. I do my best with requests and if I don't know them I make it a point not to belittle someone else's taste in music. It's mostly just common courtesy.
I don't solicit donations in general. I'm not a big fan of people looking in my case but it's public space - what can one expect? I have gentle signs in my case for photos and videos - By Donation Please.

My big peeve is the new digital camera and the public's lack of respect. In the old days, people took one or two photos and hoped for the best. When they got home they developed their film and took what they got. Now, everyone looks at their photo immediately, goes "That could be better." and takes another and another and another. I have news for you - I'm not perfect and your photo won't be either! It's not so much of a problem in daylight but I perform mostly in the later part of the day and people are using their flashes. Some nights I truly feel blinded for minutes at a time and almost need sunglasses more at night. I do my best to keep it to myself but will try to joke about it if it gets too bad.

Well, just my thoughts on an interesting thread!