Lisa Bettany, one of the developers behind Camera+, has posted two interesting series of photos comparing the camera quality across all generations of the iPhone, as well as to Canon point-and-shoot and professional-level cameras.
The iPhone 4S is dramatically clearer and sharper than previous iPhone versions. Using separate focus and exposure in Camera+ on the iPhone 4 & 4S significantly helped create a more balanced exposure. While it's not nearing the same quality as a professional level dSLR, it is comparable to a top of the line compact camera and even outshines it in some ways.
PetaPixel has taken the images from the iPhones and presented portions of them side-by-side to provide the clearest example of how the iPhone's rear-facing camera has evolved over the years.