hi, i also have been having a problem with the IPhone 3Gs 16gb camera application.
Everytime I tried opening the camera it would get frozen on the grey "shutter" screen and i would have to do a hard reset to get function back to my phone.
I have read all of the above and one of the posts prompted me to try deleting my most recent apps as i didn't have a problem with my iphone whatsoever until yesterday and yesterday i downloaded 4 new apps which i have now deleted.
and now my camera is working fine. not a single glitch.
I don't know whether this will fix it for good but for it to magically be working now after deleting those apps when it was having such intense break-downs im assuming one of my apps was causing a software clash.
Try deleting some apps, then try the camera.
Bocoo