Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
I don't use the camera much for stills but as a video camera, it's been awesome!!! Been using it a lot, vlogs, gameplay videos on my MBP, etc etc. pwns hard, waiting on my tripod mount for it to come in, yipee!
 
Camera is good 720p is quite nice but it should be a better still camera.
I'm sure people will upgrade from 4g if the camera improves to the level of the 3GS or 4.
 
The resolution on the iPod is pretty low, but damn is it a quick camera. In contrast, I have a 3.2MP camera on my Android phone (granted it's a lower end Android), but the camera is slow as hell. It's decent for still life, but forget about taking a picture of anything that's in any sort of motion.

For realistic use, the iPod touch camera is still better, despite it's low resolution. I've made 3x5 and 4x6 prints from pics taken on my iPod touch that turned out pretty nice actually.

And of course the video capabilities are awesome. No complaints there. Sound is top notch as well. The iPod smokes my low end Android in this department too (video and sound).
 
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.