Note how the LG does a lot of noise reduction and sharpening to try to hide the blur, whereas the iPhone appears to do no processing on the image at all and it still looks great,
Maybe it's just me, but the image from the LG looks much better than the one from the iPhone. Considering that the iPhone is more than an order of magnitude more expensive, I fail to see how this argument favors the iPhone. At all. Basicly you're saying that the iPhone has a marginally better camera than a phone that costs about 1/15th of the price. Yeah. Not a compelling reason to buy. I am no apple fanboy, but the iPhone gets it almost all right.
I didn't say it wasn't. I want one as well. I'm saying its substandard components, should not in good consciousness cost the price they do. The primary disadvantages of the iPhone:
Doesn't work with Flash, Java or PDF's. Making it's Internet Browser mostly a gimmick.