I continue doing tests to somehow figure out what the problem is...
I hope it is from camera as if hub will not work error free, I can not connect various devices I want
Here I connected the hub again and commanded mjpg_streamer to start without -y mode:
mjpg_streamer -i "input_uvc.so -d /dev/video0 -f 15 -r 176x144" -o "output_http.so -p 8082 -w /www/webcam"
if I use -y, I get a fail immediately and no error report. In case of above command, It seems that it starts (after all it sees the webcam on /dev/video0), but it stops saying:
"no space left on the device".
If I connect camera without hub, then the same command works with no complain about the space.
I used 2 different hubs, also I connected same camera via hub to windows xp and I have it recognized (both camera and its internal audio microphone / sound card as USB 2.0). Next I tested and camera-via-hub in windows xp is working properly, then why shouldn't it work on my wr703n with openwrt?!