For a phone, I think the camera is quite good. It takes better pictures than my sister's S3 (megapixels schmegapixels, it means nothing). I think it rivals my friend's iphone 4S camera in daylight which, deserved or not, seems to be the phone-camera gold standard right now. It completely blows the iphone out of the water in low light and indoors. It comes close to my Canon S100 up to a point, but blow up the pics and it's no contest.
I agree that there is only so much you can expect from a fixed lens tiny camera in the size constraints of a phone. My S100 has multiple lenses, dedicated electronics, a popup flash, and is over twice as thick as any phone and I still get the occasional messed up, out of focus, or motion blurred shot. It's rare, but I still get them.
Enjoy the phone knowing it does have one of the best cameras available right now in a mobile phone. I still take my Canon with me on vacations and special occasions, but for spontaneous moments, this is as best it gets... for now.