Or he has given up on us.
Fear not, I just had a busy day today
Sorry for my late re-entry into this debate, of which I am clearly losing.
Starting off let me revise my position a bit.
I will agree, the higher resolution and increased preservation of detail in some situations is a nice improvement over the 3GS.
As some of you have posted the slightly more noticeable noise is a good trade off for greater information retention in the images.
My main issue remains the over-saturation and almost un-avoidable clipping of areas featuring rich color. This leads to a large amount of detail to be lost outright, something I think we can all agree is bad.
Now let me post two pictures that I think illustrate well my issue with the current set-up of the iPhone 4's camera.
The first photo is completely unedited from my iPhone.
The second photo from the concert has been "de-noised" in iPhoto, but saturation is left as it was taken.
In the first photo you can see that the lighting conditions were optimal. The iPhone did a pretty good job of exposing the shot and the detail of the leaves and vine are sharp and well resolved. However, look at the red flower, you will notice that the over-saturation of the iPhone 4's camera has blown out any detail within the color. All that remains is a flat, red blob that outlines the flowers shape. At this point almost any color correction would only further expose the lost information in this area.
The second image is one from the show I took some pics at. The iPhone actually did a fairly good job in terms of exposure despite the dark lighting conditions. Once again, look at the areas of color, especially on the players skin. Over-saturation once again has blown out all the areas of color, reducing the detail to a point of "comic book" look, as I previously described

.
In all honesty, a software update that simply reduced the saturation setting of the camera software, even slightly, would make this camera much more usable.
Thanks for all the great participation in this thread so far.
You guys have already convinced me otherwise on the issue of grain.
With the examples I have provided, what are you thoughts?