1. That was never the argument.
2. It wasn't hard to beat the Nexus 4.
That was true until the Galaxy Nexus. It was the first Nexus that started moving over into flagship territory. The Nexus 4 was the first and most obvious. 2GB RAM, high PPI screen (for the time), and the fastest CPU out. All of these combined were only on a couple other phones, all of which costed nearly double the price. Same principle for the Nexus 5.
But again, whether or not the Nexus line is a flagship isn't the argument.
Ok cool.
That was never something I debated. In fact, the price going up is a good thing for camera quality and battery capacity. It means they are more likely to be better. Now you are finally understanding what I was meaning in my very first comment.
I still dont think the camera is bad. Its fine for casual use. I certainly wouldnt use it for my kids graduation pictures but i wouldnt bring any phone camera for that. Moments like that deserve a real camera.
A bigger battery and a better camera arent big expenses to add. I think the iPhone camera is $12 for them. The N5 has many of the same specs as flagships at that time and still it was much cheaper.
The Galaxy S5 costs $256 to build. Why didnt Google use a better camera? Well they did. A lot better than the Nexus 4. The battery in my N5 is better than the battery in my GS3 was t while being smaller.