Yeah, it's just a camera on a phone but when they promote the phone with a 5MP camera, dual LED flash, image stabilization and 4X digital zoom. and it still takes pretty crappy pics, I say that's a fail! and IMO, it DOES lag! My daughter has an EnV3 which takes amazing pics - way, way better than my Droid ... We have all heard the argument that it's a camera-phone but hey, the OP asked about the camera and imo, and apparently the opinion of many others, Droid camera kinda sucks! I use my digital camera for photos because the droid unless it's in bright light, just takes lousy pics most of the time. My DD is able to use her EnV3 AS her camera - it's that nice. I just expected more of the Droid.
I've tried a few other apps ... Pro5X, FX Camera, etc ... they may improve the camera slightly but still, it's pretty bad.
The VIDEO part of the Droid camera is pretty sweet however ... I prefer taking video to still pics ... LOVE it!