Same problem with mine -- I just transferred 197 pictures to a PC and maybe 5 are usable -- just wretched focus. 2.3.4, System 5.9.905. Trying Camera Zoom, which fortuitously is on sale this week...
Strange... and you're stock? Is there anything in the camera lens?
Camera Zoom FX has been on sale for a while, but it's a good value.
I went to Preview Night at ComicCon in San Diego without my camera. Using the Bionic was hit and miss in terms of focus. You can see one at Slave Leia | Flickr - Photo Sharing!
FWIW, the autofocus really sucked on my Bionic until I got on the ICS leak. Running 238 and camera is SO much better now, the focus and capture times are greatly reduced. Have not tried Camera Zoom FX.
I am not sure if using stock Camera but I use Camera Zoom and just great. Just make sure that focus is on Auto and not infinity. Also I notice that when you update Camera Zoom defaults back to Infinity which always seems to never focus. Auto is great though.
Try going into apps and clearing data and force closing the camera app. It may not help, but its worth a shot. :)
Sounds like hardware issue to me when camera only shoots blurry pics. My Droid2 has same issue stuck in macro mode..had to replace it under warranty.