The camera on the new iPhone 4 is it's best feature. At least I think so for now. Of course, the camera performance is coupled to the screen resolution, so maybe it is a set of two features that make this a superior toy/tool/device.
I am taking almost all of the photos that appear in this blog on the iPhone, and have been impressed with how well they turn out when viewed in full resolution. The lens is a limitation that makes me a bit sad, but is offset by the portability of having a camera all the time.
Aftermarket apps like Camera+ and Iris Phone Suite and PS Mobile let me play with the snapshots and turn them into bits of fun, images that transcend the phone camera platform. So inspired have I been, that I opened a Flickr account, since Google for some crazy reason limits storage in Picasa. So be it.