ClearCam in the iTunes App store. It takes a rapid sequence of pictures, analyzes them, and creates a higher res photo. It's only $1.99 and I've been very impressed with the results.
I don't always use ClearCam, but when all I have is my iPod Touch and need to take a higher res photo, ClearCam does the job.
It is easy. Doesn't take anything special. It works exactly like an iPod Touch (except FaceTime) only better. I put the iPhone into Airplane mode (to disable useless cell communication) and then turn Wifi on. I took the iPhone-specific apps, threw them in a folder, on a far screen so that they're out of the way.