Misleading Decimals
I'm using a Droid X, not the 2, but while I'm searching through all the forums I can find for MY issue, I'll try to shed a little light on YOUR issue.
In the Gallery App, my photos are only showing 2 decimals as well. However, this is the Gallery App rounding to save space. 0.01 degree translates to over half a mile where I live. The photos are actually stored with more than 2 decimal places - the situation isn't THAT bad, thankfully.
When I take the same photos off the camera and look at the EXIF data in IrfanView, I see the GPS coord's in degrees/minutes/seconds. Unfortunately, the seconds have NO decimals. One lat/long second translates to ~90' where I live.
Summary:
Max accuracy of Droid X's GPS chip: ~10' under ideal conditions
Best accuracy the Camera App stores: ~90' (stupid, stupid, stupid)
What the Gallery App displays: ~ 1/2 mile (good enough to figure out what city you took the picture in, but don't use the Gallery coord. display for setting waypoints or anything!)