Hey, just thought it worth posting these. Was down in London yesterday evening and happened upon the perfect chance to test the iPhone's HDR capabilities.
The pic is shot in front of the Hammersmith Apollo around 18:30. The sun is setting just behind the flyover and isn't quite in shot and the billboard is actually a screen so quite brightly backlit. There is surprisingly little artificial light at this spot (well, at that time anyway) and the result is a scene that looks pretty damn good in real life but is a pig to catch on camera, doubly so on a cameraphone. The shot was focused (and I think I'm right in saying, exposed) on the billboard to the right of the building. I didn't spend ages setting up the shot as I deliberately wanted to use the camera in the same way that most regular people would (i.e. point, tap, shoot) and put a lot less effort into composition etc than I normally would.
The HDR shot (on the right) shows a massively improved image with almost all of the image exposed well enough to pass muster. The area underneath the flyover now shows a fair amount of detail and the building to the left shows a great deal more detail. The sky is slightly improved although still not realistic but frankly I'm not sure you'd get much better anyway considering you're basically shooting such a bright light source. Of course the shot is handheld and as it was a quick snap I admit I didn't try and steady it as well as I should have but even so there's very little blurring. The billboard is also vastly improved and is actually legible in the HDR shot.
Now for the bad news, although it does prove that there's multiple shots going on here and all you have to do is look at the bikes. In the non-HDR shot, the rider with the hi-vis jacket just to the right of the sign on the building is more-or-less frozen by the shutter. In the HDR shot however they appear to be phasing in and out of this reality. Same with the bike in the foreground. There's also a slight loss in clarity, although that's more likely to be my hands moving than anything else.
So, to wrap this up, this is a decent example of how HDR should, and should not, be used. Moving objects, by and large, bad idea. Scenes with a large contrast range and mostly comprised of objects not terribly likely to move however can benefit greatly. It seems clear that the iPhone is indeed taking multiple shots and that, providing you're not trying to take a lot of shots quickly, it's probably worth leaving on most of the time, you can always chuck the HDR shot if you don't want it.