I have an iPhone and I love it! (I also have a BlackBerry Torch for work - not quite as good). And I find myself using it's handy camera more and more (as I don't always have my DSLR with me). I thought I would hate a camera phone, mainly because I was a quasi-camera snob. (Well, I still may be, but I'm getting better). But as each generation of phone gets better in features and functions, the camera is also getting more usable.
The first photo I took with the iPhone 4 was of my financee's cat; her name is Lily - the cat that is (I started a cat name blog because of her). It was just for fun and to show her (now my wife) how the camera worked on the phone. And there the addictaion began.
The camera on the phone is more of a tool for me that a creative outlet (although some use it for art these days). I have it with me everywhere, and when I need to remeber something on a sign or want to record an interesting moment of scene, then bam! It's there.
Sadly, the most photographed muse on my iPhone is Lily, our lovely cat.
I took the photography above with an iPhone 4 and I think that this is an example of the best quality shot that comes from an iPhone. The photo is not grainy, the colours came our correct, and the brightness and balance is great. However, not every shot is so good on them .
This last phote of our Lily cat going for a treat is much more graining and the colours are really off. Note, it is near dusk and with incandescent light on.
This small sample shows some range of the iPhone 4 camera. While not amazing, I find it works very well in bright light (for a camera phone). I wouldn't thrown our your P&S or DSLR for using this as your main camera, but for something easy to carry around and use, iPhone 4 cameras (and by extension, other camera phones) and a useful tool to have in your bag of gear.