The iPhone's camera resolution leaves much to be desired, but there's more to image quality than just resolution. And according to one series of tests, the firmware 3.0 is taking better photos than its predecessor.
iPhones.ru took side by side photos with new iPhone firmware and old iPhone firmware. That lead comparison photo is not the result of a single snapshot, but 30 that produced similar results: Firmware 2.2.1 blurred the cat, then 3.0 blurred the cat ever so slightly less.
In the gallery below, you'll see an even more striking example at full resolution. Here, dark detail is still fairly grainy (but noticeably improved), the firmware seems worlds better at exposing the bright light sources of the soda machine and street light.
Frankly, the additional dark detail in the 3.0 shot that makes me a little skeptical. But updated firmware could easily be better at handling bright light by recognizing when overexposures/blow-outs were happening...which might affect the darkest parts of the image as a corollary.
Updated firmware, in general, can make a huge difference in the SLR world, so the theory isn't complete mad science. Time will tell if these results are duplicated elsewhere. Until then, anyone running 3.0 is free to share their own anecdotal evidence in the comments.