yeah, we've seen time and again that the iPhone can kick some but with good lighting.
Even without it, I find its HDR mode pretty solid.
The biggest thing that kills people with the iPhone is that it's difficult to take pictures with it without introducing camera shake. However, if you use the headphones as a shutter release (by pressing the volume up button while the camera app is open), it can produce some razor sharp images.
iPhone and camera shake???? NO PROBLEM! Do what I did--buy one of the TOP 10 apps for phones....Camera Control Pro. CP Pro offers "big button" anywhere-on-the-back-of-the-LCD shutter release, AND it also offers an anti-shake system that locks the shutter until the phone-came is held steadily enough for the prevailing light and the shutter sped that will be used.' A red "Shake Meter" bar oscillates whenever there is shake...when the bar turns green, the shutter will release.
Works like a charm! Earlier this summer, I slipped iPhone 4 captures into a slide show of 2,480x pixel-wide images shot with my Canon 5D Classic and 24-105mm f/4-L IS-USM zoom, and people could NOT tell which were iPhone and which were Canon 12.8 MP 5D Captures...