Hello,
Unfortunately this has been an issue with all cases that utilize that cutout shape. There was simply no way to know this would be an issue until the iPhone 4 was released and we got a chance to test it.
As for your case, just hold onto it and the receipt until the last week of July, then, simply email us back. Once the corrected cases get here, we will send you out a replacement.
We should have the corrected units by then. In the mean time, at least your iPhone 4 will stay protected, and you should be able to take most pictures, as the problem only occurs when using the flash while in low light.
If you choose to do so, you can use a sharpie to fix the flash issue until we can get a replacement to you.
http://www.youtube.com/watch?v=9HulwtwEhMo