1) I found that the flash works fine if there is NO light in the room. But if there's even a little light the color of the flash mixes very poorly with other lights. If it's dark enough to need the flash I suggest turning that one light in the corner OFF, which sounds strange, but the color of the photo will probably come out better.
2) I just use the built-in camera app to shoot. If you can't make the shot work with that then you probably need to rethink your shot. Move yourself, move the lights...change something! Buying more tools and toys won't help.
3) I use Photogene to edit. It's my favorite photo editor that I've tried.
4) iMovie is cool but I'm not in love with shooting videos on the iPhone. A lens stabilizer is really important on a small video camera and the phone doesn't have one. Shakey shots are hard to avoid. It's also hard to hold the phone without covering up the mic. I've shot video with the phone and it looks good, but I'm not in love with it. If you can find some kind of case that's made FOR video shooting (with a handle on the bottom and a space for the mic) then it might get a lot better. I don't know of such a product, but I bet they exist.
5) Avoid quick pans with the video camera. Someone else mentioned this, but here's more samples.
http://en.wikipedia.org/wiki/Rolling_shutter
6) Diptic is a cool app that lets you merge 2, 3, or 4 photos, just like how iPhoto lets you make photo books. These are not full rez, though. This not a real editing tool. What it DOES do is give you the ability to combine a few photos into a nice looking square that you can e-mail to people. It's great for "hey, look where we are" e-mails that you send your mom or something. She doesn't want to open up 3 attachements. She WILL enjoy seeing a collage of 3 photos. I really like this tool for that purpose.
EDIT: Check it out - I just made this with Diptic and uploaded it to Dropbox, all on my phone!
https://dl.dropbox.com/u/1589713/Mobile Photo Aug 3, 2010 11 45 43 AM.jpg
(Photos were not taken with an iPhone, they were synced from my computer. But you get the idea.)
I'd much rather e-mail that to someone than 3 attachments. It's not like they need the full sized photos just to see where I am.
7) The zoom may be digital, but if I know I'm gonna end up cropping later anyway then it's worth using. Same thing, and it's faster. That being said, I try to never zoom more than about 20% in. 50% at the MOST. Honestly, though, just try and walk closer. But sometimes you want a picture of a boat, right? Don't fall in love with the zoom, but don't be afraid to use it if you have to.
8) When shooting video you can double-tap the screen to blow up the picture but this does NOT change what's being recorded. It just changes what it's showing you right now. A stupid feature, I don't know why it exists, but you should know about it.
9) If you shoot video in vertical mode I will find you and I will slap you.
) do come into play, especially with the flash. 