Fixed for 99 cents
I had this problem, too.
I have fixed it. It cost me 99 cents.
My phone said I had 247 photos/videos. Itunes said I had 1700+. Both said that Photos & Video were taking up 10.8 GB of storage.
On my phone, I went to Settings --> iCloud --> Storage --> Change Storage Plan
I selected the 20GB plan for $0.99 a month
Then, I went to Settings --> iCloud --> Photos
I enabled My Photo Stream (slider to the right/green)
Then, I got on WiFi. I don't know how long it took, certainly not long enough to upload gigabytes of data, but I saw that my Photos & Camera app was using a far more reasonable amount of storage (1.3 GB, rather than 10.8 GB). I checked this by going to
Settings --> General --> Usage --> Manage Storage
Because I don't want the 20GB iCloud plan, I went back to
Settings --> iCloud --> Storage --> Change Storage Plan --> Downgrade Options (at the bottom)
... and I selected the 5 GB Free plan again.
Now for a little rant.
I am very unhappy that I had to give Apple one thin dime to have this fixed. After spending a couple of hours trying to figure out why I can barely use any storage on my phone, I had to pay to fix it. Ridiculous.
I still enjoy using Apple products, but I enjoy using them less and less over time. Not only is every release of iTunes less usable than the previous one, the last one wouldn't even install on my machine. That was about another six hours lost trying to figure out the problem.
I'm not sure if this is a first world problem. Ugh! My life is so hard!