There's more trouble for the iPhone 4. Some users are reporting that poor white balance is affecting some of their photos; specifically, indoor shots taken, both, with and without the LED flash have a predominately yellow hue. This typically happens when a digital camera has trouble reading the type of light in a given environment.
As Macworld explains, all types of light -- fluorescent light, sunlight, tungsten bulbs, etc. -- create different hues in photographs. The digital camera's job is to notice which hues are present and calibrate accordingly (that's a rough overview, but you get the idea). You can see the yellowing in the photo above, which shows the same photograph taken with an iPhone 3G, an iPhone 3GS, an iPhone 4, and a Canon 5D.
Apple has not yet responded to Macworld's inquiries about the issue, but we'll let you know if and when they do. In the meantime, have you seen this issue?