At the start of this summer I sold my old Canon Rebel and bought a new X1i so that I could add video to my DSLR. The trouble is with my big camera, as I call it even though it's not that big, is that I just do not carry it around as much as I should. Even a trip to the Richmond Night Market which is normally a great place to take pictures I've left it at home. Thankfully the camera in my new iPhone 3GS is actually really good. I've used camera phones with much higher megapixel ratings, but for some reason the iPhone's pictures tend to trump even the Nokia N95 5MP camera-phone I was using.
The saying is that the best camera is the one that you have on you, and I feel like the iPhone is a very good fall back camera. Granted it's not yet ready to be the camera that I take to Whitecaps games or the one I want to pull out when I need a really good optical zoom. However I think it can capture the events of day to day quite well.
I'd definitely hold up the picture above, taken at the Night Market with my iPhone, with anything that I've taken with an slr or dslr there. The fact that it's small, not too conspicuous and always on me makes it actually fairly great.