Ok all...if you read my posts in this thread, I was very vocal about the camera quality on the iPad 2 despite not owning one. I was trying to give myself reasons not to buy it and this was one issue that was helping me fight the urge.
Yesterday I got an iPad 2 and honestly, I've changed my tune. The back camera is weak for stills but I've yet to have the desire to take a still picture on the device. It does shoot nice HD video, so that's cool.
I guess everyone else was right. Some things must be sacrificed to reach a certain price point, and I'm ok with the cameras being what they are. The device is all about the LED backlit IPS display. Yes, a higher ppi would be nice, but is not a must. Just as Blu-Ray on my iMac would be nice, but not a deal breaker.