I am in constant amazement of the capabilities of my iPhone camera. I often carry only my phone if I don't feel like lugging my camera bag because I know I'll be able to use it and get results that I am pleased with.
There are a ton of camera apps out there that enhance photos and while I do agree that a little photo touching up is certainly acceptable, it really seems like a lot of times iPhone photos are almost enhanced too much. (I am completely guilty of this sometimes!)
Hillary gifted me an app tonight that I'd been considering buying... a friend of hers at work uses it and recently submitted some of his photos into a contest. It's a very interactive app, and not one you would use to whip out your camera and snap that quick photo of someone doing something funny. It's more of a "let's test out these different lenses/films/flashes." Instead of post-processing your phone photos, you're applying "settings" beforehand. This app made me want to go out and test everything out in different lighting, different surroundings... it made me feel like I had a new camera! Which is silly because... dun duh-duhh! It's a $0.99 application on a phone.
Oh well. At least it's making me feel happy.