I upgraded my 3gs to a 4s a few month ago mainly for the camera, no need to carry about a decent compact around with you all the time.
I found it to be great, only downside is the lack of deep of field, ability to fully edit the photos on the phone and taking pictures at night.
Here's a good comparison, first shot was with a canon 500d 18-200mm lens, second was with my iphone 4s set to HDR mode. Both then edited with camera raw.
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No excuse now for saying "sorry for the crap pictures they were taken on my phone.
Heres a few other taken recently, edited on phone with instagram app.
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