The above video shows a fashion photo shoot taken completely with an iPhone, and it isn't even the iPhone 4! The photographer uses only an iPhone 3GS. I think there might be a little cheating involved; the lighting is overdone and the photos were sent off to a retoucher, so it's not that surprising that they look as good as they do. Then again, considering that all fashion shoots probably have that kind of lighting and retouching applied to them, the fact that the iPhone can even compete is pretty impressive.
If you like iPhone photography, you might want to check out the eyephoneography blog; it's a site that features some great photographs that are taken strictly with mobile phones (including the iPhone). They just announced an exhibit that will take place next September in Madrid, Spain, and they're also working with another blog called iPhoneography to spotlight and show off some of the best iPhone 4-based photography on the Web. It's pretty cool stuff. The iPhone's mobility and interface have always made it a pretty good camera, but with the arrival of HD on the iPhone 4, it's turned into an even better tool for photographers.