Wow, if you look at Flickr's "most popular cameras" page, you can see that the iPhone is the fifth most popular camera OF ALL (that is, the 5th most used cameras for pictures uploaded to flickr.com).
This is quite amazing, since it comes after really popular DSLR like the Canon Digital Rebels and Nikon's D80.
But if you look at the "cameraphone" category, it is even more impressive: the iPhone simply trounces the competition:
And that is even if the iPhone has a sub-par camera. I guess what makes the difference is the ease of uploading pictures from the iPhone, coupled with the "always connected" EDGE or 3G network access.