Seems alot of pixelation is going on there.
You can really see it in the sky..
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That's not pixelation that's noise and it really isn't any worse than the amount of noise in some of the full size iPhone 4 photos I have seen posted like this one.

Being fixed focus closeups with the new touch won't be very good, as you can see in a couple of the other sample photos like the Pepsi bottles and the yellow post they look somewhat worse than the others because they are a little out of focus. A step or so further back and they would have been noticeably sharper. By taking a handful of test shots starting close to a subject and then moving a small step back between shots you could quite easily get a pretty good idea of the minimal focal length of the lens and avoid those sorts of shots.