Megapixels, lens, sensor sizes.... the iPhone is a terrible camera compared to the competitors.
With the market such that compact camera play second fiddle to many camera-phones in image quality, the iPhone sticks out.
Fixed focus, terrible noise, desperate lag, no flash, colour wash.. euch. It needs fixed. It's no use defending it here-- every review, however enthusiastic and recommending outside Apple forums, slates the iPhone camera and that perception of "poor camera" is market wide. It's the phone's major Achilles heal and is hurting sales. Believe it or not, people buy phones for 1) Talking 2) Messaging and 3) taking pictures. Not iFart, UI or YouTube.
Get it sorted in June, Apple! ;o)