The color temperature of the flash in only one of the two problems associated with flash photography. The other problem is the light source being both very small and directly in front of the subject, causing the modeling of the forms to be very harsh and casting unappealing shadows. In lighting, the larger the light source, the softer the light quality, which casts soft and diffused shadows. This is why a sunny day under the sun causes very harsh shadows, but standing in the shade gives you very soft shadows, since in the shade, you are only being lit by the ambient bounced light from the sky dome, which is essentially a giant soft box made by Mother Nature. This is also why photographers use soft-boxes, or sun diffusers.
Traditionally, skilled photographers would bounce the flash onto a nearby wall or ceiling, or use a flash modifier such as the famous Sto-Fen's Omni-Bounce, Gary Fong's Lightshphere, Demb's Flip-it, Dana Ng's Wing Light, etc. This creates a much softer/diffused lighting from the flash, which blends with the scene's original lighting much better and is far more flattering. If there are no surfaces to bounce the flash off of, the photographer would have to either resort to just dialing the flash exposure compensation down and make sure the flash isn't too bright and dominate the scene's lighting too much, or use the flash modifier to make the flash head appear as a larger light source, thus softening the direct lighting from the flash somewhat. I have used quite a few of the the commercial flash diffusers on the market and also made a few DIY one's of my own, and currently the best one is Dana Ng's Light Wing--it lives on my flash.
Unfortunately, these flash diffuser products can't be used with a smartphone's flash, since phone flashes cannot be rotated like a traditional hotshoe flash. While some people try to diffuse the phone flash anyway with a piece of wax paper, or semi-transparent tape, or a piece of semi-transparent plastic, the fact is, it's mainly the size of the light source that dictates how soft the light quality is, so trying to scatter the light source while maintaining a tiny size doesn't make nearly as much of a difference.
That's mainly just people's ignorance. Anyone who understands photography and the current state of technology in the world of photography already knows that you cannot get decent low-light results when the sensor is too small. Hell, even in the world or "serious" photography, being able to get nice looking high-ISO is a relatively new phenomenon. It's only in the last five years or so the technology has suddenly shot forward, allowing shots at ISO 12800 and 25600 to look pretty damn amazing (though this is only true on large sensor cameras such as the 5D Mark III and its peers).
That is ALWAYS the goal, isn't it?
When I upgraded from the Canon 1D Mark II to the 5D Mark III, I really "felt" like I had night vision, since I was able to shoot in ridiculously low light and still get decent results. My hope is that as technology advances, smartphone cameras will one day be at the same level of quality as today's high-end DSLR's. If we look at how far digital cameras have come, today's smartphone cameras are outperforming a lot of "serious" digital cameras from several years ago.
What? Don't all romantic couples take low-light photos of each other when they are looking adorable while sleeping? How about your adorable baby or pets while they are sleeping? What about at a romantic restaurant lit only by a candle light at the table? What about a moody shot of a lonely looking person sitting on the sidewalk lit only by the distant street lamp or a neon light from across the street? You guys need to think beyond the mundane and try to open up your artistic vision and see the world from a more creative/imaginative point of view. I understand that not everyone has artistic aspirations, but having a bit more creativity in our thinking will go a long way in making our lives more interesting.
There are so many interesting low-light situations that are worth taking photos of, and much of my own photography covers the low-light situations. I can talk your ears off about why low-light performance of any camera matters, but as they say, a picture is worth a thousand words, so I'll show some examples of the low-light shots I've taken over the years (with various cameras--from smartphones, consumer point & shoot, to professional DSLR's):
(These shots all have been post-processed. Originally they were all much darker and had more noise.)
http://www.ethereality.info/etherea...sions_of_china/rain_riders/rain_riders-06.jpg
http://www.ethereality.info/etherea...sions_of_china/rain_riders/rain_riders-04.jpg
http://www.ethereality.info/etherea...ortfolio/still_life_&_products/radioclock.jpg
http://www.ethereality.info/etherea...y/1DMKII_portfolio/elena/elena4/elena4-10.jpg
http://www.ethereality.info/ethereality_website/photography/c3030z_portfolio/inna/inna_6.jpg
http://www.ethereality.info/etherea.../c3030z_portfolio/elena/elena_3/elena3_06.jpg
http://www.ethereality.info/etherea...na/elena_in_shanghai/elena_in_shanghai-01.jpg
http://www.ethereality.info/etherea...tty_cat_diaries/2004/kitty_cat_diaries-39.jpg
http://www.ethereality.info/etherea...tty_cat_diaries/2005/kitty_cat_diaries-55.jpg
http://www.ethereality.info/etherea...tty_cat_diaries/2005/kitty_cat_diaries-46.jpg
http://www.ethereality.info/etherea...itty_cat_diaries/2011/kittycat_diary-1136.jpg
And I want to make a simple point about why low-light shots matter so much. This next photo is one of my most treasured photos in my life thus far:
http://www.ethereality.info/etherea...itty_cat_diaries/2011/kittycat_diary-1166.jpg
By technical/artistic standards, it is nothing special at all, and was taken in very low light by the iPhone 4 (if you look at the EXIF data embedded, you'll see that it was at ISO 1000, 1/15, f/2.8). But it is very special to me because of the moment I captured. My wife (AKA Kitty Cat, as seen in the photo diary on my website) and I were reading in bed before going to sleep, and when she closed her book, I thought she was just going to turn out her side of the lamp and go to sleep, but instead, she turned out the light and then crawled between my legs and rested her head on my tummy, and immediately fell asleep. It was the cutest thing ever, and the only camera I had close to me was my iPhone, so I snapped a couple of photos. (Obviously, the photo's been post-processed to appears brighter and less noisy).
I hope I have made a pretty good case for why we should care about low-light performance of our cameras, regardless if it's on a smartphone or not. There are just so many situations in life that happens in low-light environments.