What is watching me?
Nobody. Without any proof (I did google for it a little bit): I seriously doubt that a webcam can transmit a stream to the outside world before the desktop is active. It would be very complicated to make software to do that and it would require you to install it yourself.
And why does this happen?
It is the device being detected by the system. First when the USB system is started the camera gets powered up it will tell you by flashing the light. And the second time will be due to the program that is started during boot to use that webcam (that will probably be the program "cheese" or "skype") that checks if it can find a camera. That again triggers the light to flash.
If you want to get rid of the second one: disable the program to start at boot time and start it manually when you want to use the webcam. If it is indeed during login check "dash", "startup applications" and check for programs that can use webcams; if there is one you could disable it there.
If you want to get rid of the first one you probably need to unplug it before booting (that will also get rid of the second time). As soon as you plug it in it will flash when the webcam gets detected by the system.
Some independent topics related to this (and not per se Linux):
Use common sense. if it always flashes during boot and always at those two specific moments with every boot I would expect this to be normal behaviour of that webcam.
When you need to worry about it flashing is when it flashes during normal operation; When you are using your computer and not using the webcam. If it flashes then you should investigate this.