camera on the iphone 4 isn't that good - particularly in lower light. Some photos have come out really well - when they are good they are good - but more often than not they are just snaps. Quality if you even think about zooming goes rapidly downhill and not good in lower light.
Worst thing about it though is the shutter lag time - seems to take forever, especially when you want to catch a cute quick moment.
It's handy though if you are somewhere and want to take a quick pic for reference. And I do tend to now take pix of all things like hospital appointment letters, pick up codes for online purchases, insurance documents, school timetable and events lists, - basically anything that I might want to refer to but not have with me - quality is fine to zoom in and read without any problems, you just need to take a moment to make sure you have got good light and hold the camera nice and still. But - whilst that is fine if you are taking a pic of a document as it is unlikely to run away, it's not quite so good when you have a couple of speedy little ones zooming around and you want to catch their antics!
If you want to see some pix taken inside without zooming, some with flash, some without, on an iphone4 camera all the photos on my profile have been taken with it.
I still keep a small camera in my handbag to take decent pictures when we're out though, and if we are going somewhere 'proper' where I know I want decent pix (wedding, zoo, holidays etc) then I'll take my proper dslr with me as the shutter time is so much faster and the pix are so much better!