I am a big fan of iPhone photography. Being able to edit the photos in the device and easily share and upload them via wi-fi or 3G makes the iPhone the most fun digital camera I have. You learn to accept the limitations of the device in exchange for the ease of sharing them via the web, email, or SMS. (That said, I have made some great looking 4x6" prints from iPhone photos. I may have to try to make some larger prints just for giggles.) Since the iPhone camera is so simple, it makes it easier to concentrate on seeing and composing compelling images. (IMHO, at least.)
Take a look at Chase Jarvis' "Best Camera" book, app, and website:
http://www.thebestcamera.com/
The idea behind the book, app, and website is that the best camera is the one that's with you. The book is a nice little photo book shot entirely on the iPhone. The app lets you edit your pics using different filters and combinations of filters. This app lets me creatively edit my iPhone pics more quickly and easily than any other app I've tried (and I've tried a bunch). The website is a convenient way to share iPhone photos (the app can also simultaneously upload pics to Facebook, Twitter, and Flickr).
Another app I really like is Photogene. Basically a mini-Photoshop for the iPhone. It is MUCH better than Adobe's Photoshop.com Mobile app.
Lightmeter looks like a very useful app--wish it would work on my iPhone 3G.
Apple is going to make a "camera connection kit" for the iPad which will allow you upload photos via your camera's USB cable or SD card:
http://store.apple.com/us/product/MC531?mco=MTczNzY0NDg#overview
It would be awesome if this thing works for the iPhone, or if someone develops an app (or hack) to make it work for the iPhone. It would allow you to enjoy the picture quality of your digicam or DSLR (or M9 if you're really lucky) and share your pics with nearly the same ease as iPhone pics. Fingers crossed...