1. Be confident. This takes practice, so start by shooting at busy events/festivals where there will be lots of other photographers as well. Most people are having such a good time they won't even notice you. Confidence in yourself will make others have confidence in you.
2. Dial in your camera settings (ISO, colour temperature, etc.) and exposure before you frame your shot, even if you don't know what or who your subject is yet. I usually shoot in Manual or Aperture Mode. Use exposure compensation if you know the scene requires under or overexposing. You want to be quick as possible, there's no time to fumble with camera settings if you're trying to capture a fleeting moment.
3. Think of how you want to compose the shot before or as your bring the camera up so you can set your focus point quickly (if using Auto Focus). Using f/8 will give you room to get your subject in focus with details, however, using a wider apature like f/4 for a shallow depth of field will give you more creative shots.
4. Use a wide angle lens, a 35mm is great. You can get more in the frame without pointing your camera directly at your subject.
5. Use a telephoto lens to shoot from a distance. This also helps if you're in a crowded or restricted place where can't get close enough.
6. If they make eye contact, smile! Nothing is creepier than looking guilty and pretending you didn't take their picture!
7. Talk and interact with people. Most people get creeped out because they don't know why you want to take their picture. Be upfront and most people will let you photograph them. Engaging in a conversation may lead to a 'posed' picture because your subject will naturally look into the camera and smile, take a few smiling shots, continue talking. Everyone has an interesting story. Once your subject is comfortable with you, bring the camera up and shoot again - you already have their permission.
8. Small gestures. If you are too far from your subject or don't speak the local language, point at your camera and then back at them for their permission (pointing may be considered rude in certain cultures, know the local customs). People are pretty clear when they don't want to be photographed, respect that.
9. Pick a location/scene/backdrop and just hang out. Stand, sit, chill in one place with your camera clearly visible around your neck, in your hands or up and ready to shoot (even if you're not). If you stay in any one location long enough, people who walk into your frame will be less creeped out 'cause they will have either noticed you first and kept walking into the frame (and not care) or not notice you at all. If you stand in any high traffic area long enough, something interesting is bound to happen. Remember to have your exposure set so you're ready to shoot.
10. Shoot from the hips. This means having the camera around your neck or over your shoulder. You need to have all your camera settings dialed in and be familiar with your lens so you know how to compose the shot without looking through the view finder. Don't forget to take your lens cap off!