They're expensive and bad here too.
however the ones that really get my goat are the class ones where they put them into little groups then photoshop them into a big long picture that you can't get frames for so have to buy expensive ones from the photographers if you want one. Much better when they put them standing in old fashioned format that you could have a 7x5 or 10x8 print out of that you could put into an album. I don't really want to have the pix of the rest of the class on the wall but the long photos are a pain to store if you do decide to have them.
ds1's school did the long photos but this year they offered the option of a small photobook with each group photo on a different page, thought that was quite nice, easier to store, space to write stuff on the back of photos, etc etc.
ds1's infant school did a nice thing for leavers - one of the parents was a good photographer. She spent an afternoon at the school, took pix of all the friendship groups (it was a nice day for ds1's year so they were all taken on the climbing frames and in the playground, they had lots of fun doing it) then individual pictures of each child, so there were probably 2 or 3 individual pix and 3 or 4 group ones that had your child in.
All the pix were then put on a dvd and it was sold to raise funds for the school - think it was less than a fiver. If you wanted to print out one of the photos from the dvd you could, but even with the cost (say at Boots or Photobox) and the cost of the dvd it would still cost less than one school photo. I thought it was really reasonable and if half the kids went for it (I suspect more than that did) then that would have been nearly £500 towards school funds so a win-win all round.
I know photo companies give the school's commission on the photos they sell - but I would be surprised if they made that much on the whole school's orders. Now just need to convince them that they need to rethink their school photo strategy - not going to be an easy task!