You know what the problem is with neighborhood watch is... everyone watches and thats it. Go up to him, ask him what his deal is. Let him know he is being watched.
Yeah, take the risk and confront someone you think is up to no good. Plus if the person knows he's being watched in your neighborhood he'll just go somewhere else. I think not. But it is a good idea to get a good description of the person, a vehicle if there is one, and report it to the PD so they can look into it.