I posted this on Apple's forum as well. It seems to be a common issue. I went to the Genius Bar today. I had my first generation iPhone 4 replaced a few weeks ago because of reception issues. My new iPhone has great reception, but the camera exhibited an odd blue hazy blob in the center of every picture. The Genius definitely noticed the bluish blob when I pointed it out. He was about to swap out my iPhone with a refurb. The Genius tested the new iPhone before he gave it to me -- and it was worse. The blue blob was much more pronounced. So he tried another iPhone. It had a greenish blob. He took the back off of it to see if there was a film on the lens cover, but it was clear. He brought in another Genius who had a 1st generation iPhone 4. Interestingly, the image from that camera was perfect. Yet another Genius was brought in. They ended up checking 10 iPhones. All but that first gen iPhone 4 had the problem to differing degrees. (Mine ironically was one of the better ones.) The third Genius said, "Oh well, I guess that's the way the camera is. Remember it's just a phone." I emphasized that it's a really expensive phone and that my first gen model didn't have this problem. His response: "You can probably correct the problem with image editing software." I replied that there shouldn't be a problem in the first place. The upshot of all this is that they're ordering a replacement camera for my iPhone, which should be in next week. We'll see if that fixes the issue.