I should have mentioned that hallucinations are also frequently related to cerebral cortex problems such as epilepsy and migraines. About 1/3 of migraine sufferers see auras preceding the onset of the headache.
In addition, people frequently report having hallucinations as they are falling off to sleep, known as "hypnopompic hallucinations." They can be frightening, particularly if they are accompanied by sleep paralysis (as they often are). These are often images of faces floating over the person.