To be honest, the iPhone camera is probably the last thing on your mind when you're deciding whether to purchase this gadget. I doubt it will be a deal-breaker.
Let's face it, camera's on mobile phones are hardly going to win you photography awards.
Analysis
The iPhone camera features 2 megapixels. This isn't as good as some, but it's better than most. This is fine for email and Web sharing.
A nice feature of the iPhone is the ability to sync it with your computer to move images onto your phone.
The shots you take in daylight are rich and colourful.
However, the camera has no zoom function or flash. So if you’re shooting in low-light situations, your images will be poor.
Of course, Apple will argue that the iPhone is a music handset and phone combined, rather than a camera. And I'd tend to agree. If you want decent photo's, buy a decent camera.