This has ultimately come down to a matter of interpretation. The interaction/observation is what collapses a wave-function, but its quite true that, given an interaction is not
observed the systems (we'll say particles for convenience) will entangle. Thus the matter comes down to what constitutes an observation. Of course, for all practical purposes, the Copenhagen interpretation circumvents this matter completely- but seeing as this is the philosophy discussion, I will take the liberty to introduce
Eugene Wigner's thought experiment 'Wigner's friend', which raises, more bluntly than ever, the same problem Schroedinger's cat presents (though of course, both are irrelavent to the actual physical application of quantum theory). Wigner considers this as decisive that consciousness has a role to play in collapse.
See Eugene P. Wigner, Symmetries and Reflections: Scientific Essays (MIT Press, 1970)