I was running into this too. Here's what I discovered:
- I currently have a white 4S which is experiencing this issue, previously had a black 4 which didn't have this issue.
- Using the same case on my 4S that I used previously on my 4 (smoke colored semi transparent TPU Gel case)
- Took pictures, got the washed out foggy effect with 4S with case.
- Same picture with my old 4 with the case, did not produce the foggy effect.
- Removing the case on the 4S also make the foggy effect go away.
- Tried cutting out a much larger hole on the case, to keep the flash from reflecting off it. Effect is less, but still present. As of now, only cure seems to be removing the case completely.
Attached are my test shots for reference.
1. With case
2. Without case
3. With case, but larger hole cut out of case around camera and flash (effect is reduced, it's just that the pic is out of focus)
For me, it appears to be a combination of a white phone, with a somewhat transparent case (smokey clear), as my previous black iphone 4 with the same case didn't have issues. In trying to watch the flash while taking pictures (hard to do without blinding yourself), it appears the flash almost bleeds across the face of the white body and under the edge of the case, causing a reflection when the picture is taken. Don't notice the same thing on my black 4.
Anyways, debating what to do. Will likely see if I can find another case which doesn't produce the same effect, but if I can't find one, might try to return/exchange the phone at the Apple store for a black 4S instead of white, if this is going to be how the camera and flash work, as going without a case is not an option for me.
If you are experiencing this issue, and you have a case, I highly recommend you try removing it, to see if it improves for you as well.
