Chamomile is promoted for GI discomfort, peptic ulcer, mouth and skin irritation, pediatric colic and teething, mild insomnia, and anxiety. Flavonoid apigenin may have affinity for benzodiazepine receptor and histamine system.  2-4 g of flower heads three times day or liquid 3-10 mL TID is the standard dose. Side-effects are rare, but are primarily allergic reactions, in one case causing death (chamomile enema leading to anaphyllactic shock). 

Despite the tremendous popularity of chamomile, there are only a few small human studies.  At present, it seems a pleasant tea with little evidence of any medical benefits and chamomile cream may help some with eczema and wound healing, although I think honey is probably better and better researched.

Chamomile oil, orange flower oil and ginger oil inhibited H. pylori growth in extraordinarily low concentrations. Heidelberg. Pharmazie. 2005 Jul;60(7):498-502. In mice, The antipruritic effects of antihistamine H1 antagonists, oxatomide (10mg/kg) and fexofenadine (10mg/kg), were only partial in this test. However, the antipruritic effects of these agents were remarkably enhanced by the combined administration of the ethyl acetate extract of German chamomile (300mg/kg). Japan. J Ethnopharmacol. 2005 Jun 16. Chamomile decreased sleep latency in sleep-disturbed rats. Biol Pharm Bull. 2005 May;28(5):808-10. A case of methotrexate-induced oral mucositis in a patient with rheumatoid arthritis, who was successfully treated with Wild chamomile mouthwashes. Greece. Phytomedicine. 2005 Jan;12(1-2):25-7.

Women most commonly reported using herbs popular in traditional Mexican culture, including manzanilla (chamomile), savila (aloe vera), ajo (garlic), una de gato (cat's claw), and yerba buena (spearmint). Health Care Women Int. 2001 Sep;22(6):585-97.

Chamomile for Colicky Infants; Add Peppermint for Children Ingestation; Ginger for Nausea: Chamomile as one of the most widely used and safest herbs for children with abdominal discomfort. It can be given in small amounts to treat colic in infants and can be combined with peppermint, star anise or fennel for stomach aches, gas, indigestion and bloating for school-age children. Ginger has been well documented as a remedy for nausea and dyspepsia. Probiotics, such as yogurt, have been used to prevent antibiotic-associated diarrhea, newborn colic, ulcerative colitis, and a variety of forms of diarrhea. Star anise should be avoided for colicky infants. Kathi J. Kemper, et al. Wake Forest University, et al. Contemporary Pediatrics 9/05.

Chamomile Preparation Said to Help Hot Flashes: In a 12-week DB PC study of 55 postmenopausal women with hot flushes and refused hormonal therapy, those given a herbal preparation of chamomille and Angelica sinensis (Climex)(5 chewable tablets daily between meals) had a much larger decrease in number and intensity of hot flushes (90-96% vs 15-25%, p < 0.001) starting in the first month (71% reduction). There was also a marked alleviation of sleep disturbances and fatigue. The immediate effect of natural plant extract, Angelica sinensis and Matricaria chamomilla (Climex) for the treatment of hot flushes during menopause. A preliminary report. Kupfersztain C, et al. Petah Tikva, Israel. Clin Exp Obstet Gynecol. 2003;30(4):203-6. Ed: From past experience, I am skeptic of Israeli herbal research which is sometimes very closely tied to the manufacturer. However, if true, the benefit is impressive.

Chamomile Cream Said to Help Eczema: In a 2-week, "partial" DB PC study by the manufacturer, Kamillosan(R) cream (chamomile extract ws tested for eczema on a half-side comparison vs. 0.5% hydrocortisone cream and vs. the vehicle cream as placebo. Kamillosan(R) cream showed a mild superiority towards 0.5% hydrocortisone and a marginal difference as compared to placebo. Proof of efficacy of Kamillosan(R) cream in atopic eczema. Patzelt-Wenczler R, et al. Frankfurt am Main, Germany. . Eur J Med Res. 2000 Apr 19;5(4):171-5

Chamomile Cream Helped Eczema: In a 4-week DB study of 161 patients suffering from inflammatory dermatoses on hands, forearms, and lower legs who had been initially treated with 0.1% difluocortolone valerate, Kamillosan cream did as well as 0.25% hydrocortisone and did significantly better than 0.75% fluocortin butyl ester, or 5% bufexamac. For the indications tested Kamillosan cream showed more or less equieffective therapeutic results as compared to 0.25% hydrocortisone. With regard to neurodermitis, Kamillosan cream not only showed the same therapeutic effect as 0.25% hydrocortisone but is even of marked superiority towards other reference products. Comparative testing of Kamillosan cream and steroidal (0.25% hydrocortisone, 0.75% fluocortin butyl ester) and non-steroidal (5% bufexamac) dermatologic agents in maintenance therapy of eczematous diseases. Aertgeerts P, et al. Germany. Z Hautkr. 1985 Feb 1;60(3):270-7.

Chamomile May Have Helped Wound Healing: In a DB PC study of 14 patients after dermabrasion of tattoos. the decrease of the weeping wound area as well as the drying tendency was significantly helped by a chamomile cream. Effect of chamomile on wound healing--a clinical double-blind study. Glowania HJ, et al. Hautabteilung des Bundeswehrkrankenhauses Koblenz. Z Hautkr. 1987 Sep 1;62(17):1262, 1267-71

Chamomile-Pectin Preparation Helped Childhood Diarrhea: In a 3-day DB PC multicenter study of 79 children (6 months to 5.5 years of age) with acute, non-complicated diarrhea, a preparation containing apple pectin and chamomile extract (Diarrhoesan) or placebo (n = 40) ended the diarrhea more frequently (33/39) than placebo (23/40)(p < 0.05) . Pectin/chamomile reduced the duration of diarrhea significantly (p < 0.05) by at least 5.2 h. The parents expressed their contentment more frequently (82%) with pectin/chamomile than with placebo (60%, not significant). Double-blind comparison of an apple pectin-chamomile extract preparation with placebo in children with diarrhea. de la Motte S, et al. Harrison Clinical Research, Munchen. Arzneimittelforschung. 1997 Nov;47(11):1247-9.

Chamomile Causes Rare Cases of Contact Dermatitis: Contact Dermatitis. 2002 Oct;47(4):189-98. Chamomile tea enema anaphylaxis. Med J Aust. 2001 Jul 2;175(1):54. Contact urticaria from Matricaria chamomilla. Contact Dermatitis. 2000 Jun;42(6):360-1. Allergic conjunctivitis to chamomile tea. Ann Allergy. 1990 Aug;65(2):127-32. There are more articles similar to these.