Photography site dpreview.com has published a lengthy review of the iPhone 5's camera. Last year, famed photographer Annie Leibovitz called the iPhone "the snapshot camera of today", and the iPhone has been the most popular camera on Flickr for years.
The full review is worth a read, but this excerpt looks at interesting questions about the future of casual photography and how the simple "camera phone" has revolutionized both the mobile phone and camera industries.
This is great news for people like us who write about digital photography, because it signals a paradigm shift. This doesn't happen often, and it's very exciting when it does. Already, we're seeing mainstream camera manufacturers scrabbling to add connectivity to their products, and it's not just desperation that's making them do it. If the iPhone, and devices like it, have had a transformative effect on the industry it's because they've had a transformative effect on peoples' expectations of cameras, and photography. And the industry is doing what it always does - moving to fulfill a need.
The iPhone 5 is a fine mobile device, with an excellent camera. In qualititative terms it's not the best camera out there, and nor is it the best camera on a smartphone (the Nokia 808 has that honor, for now) but it offers satisfying image quality, some neat functions like auto panorama and HDR mode, and - crucially - it is supremely easy to use. It isn't much better than the iPhone 4S, as far as its photographic performance is concerned, but it isn't any worse (notwithstanding a somewhat more noticeable propensity towards lens flare). When manufacturers employ pixel-binning to achieve higher ISO settings we don't normally celebrate the fact, but in the case of the iPhone 5, it gives you greater flexibility in poor light (i.e., you might actually get a picture now, where you just wouldn't with the iPhone 4S) and the drop in quality is unnoticeable when the images are used for sharing/web display.