Apple's Watch is designed to be both fashionable and functional.
iPhone 5 Camera Parts Show No Attached Flash
Apple.pro has posted photos comparing parts of the iPhone 5 camera components alongside the iPhone 4 camera components. (via 9to5mac) Notably, the iPhone 5 rear camera does not come with an integrated Flash attached to it. This would suggest that the case photo posted earlier today may be accurate, and that the next generation iPhone's camera flash will be located separately from the camera.
Apple.pro offers this photoshop mockup of the camera and flash in separate locations: