All of this. I have a Sony digital camera that I bought in 2001 with a Carl Zeiss lens and is 3.2MP that blows the iPhones camera away. For everyday picture taking though, the 4S camera is excellent.
Yup.
Megapixels aren't everything. In fact, much above 3 megapixels doesn't really matter for most people - only if you're doing high end photo work and need massive images to scale up for posters, etc.
I had a 10 megapixel camera years ago - but it was unfortunately crap. It had similar limitations to the 4s camera, only much more so. It had horribly slow shutter speed, and photos often speckled badly due to the ISO required. Because the lens was far too small to get adequate light to the high resolution sensor. But "10 megapixels" looks good on the box, right?
Its all in the lens, and having a suitably matched sensor.
And there is no way a phone camera is EVER going to compete with a professional camera on that front, there simply is not enough space for a comparable lens.
You can see the limitations on the iphone camera in low light quite clearly. Without using the flash (which is crap and will just reflect off things and wash them out anyway), you'll see the images start to get speckled due to ISO noise and the shutter speed will slow way down and you'll find it hard to get a non-blurry shot without being very still. A proper camera can capture a lot more light and will be able to shoot in much darker lighting before things get as bad.
But again. Phone camera - limited cost and limited space. Considering the restrictions apple did an awesome job on it.
And of course, the best camera is the one you have with you. It doesn't matter how good your $x,000 camera is if it is sitting in its bag at home, does it?