While there are camps of people who expect their 8 mp sensor on their phones to match that of a point and shoot, there are the rest of the people who simply expect their phones to match up to the hype set forth by the company putting it out there.
I always laugh when I see that "Screen images simulated" on commercials, just show us what the thing really looks like so I can make an informed decision!
Finally, when on vacation to scotland, my wife broke my camera. It was a sony that ran me $400 when I got it. The Droid X matches it in clarity, color trueness and MP, so when a picture is being edited in photoshop, I can get it really close before the picture succumbing to pixilation. The video camera, although not perfect, allowed me to take a 2 minute long video of my niece's first steps, email it to my wife and making her year. While no one really cares about your $40,000 or $250 "True HD" video cameras or your expensive DSLR's, we are extremely satisfied with the camera our cell phone came with.
Oh, and cringe some more, the output from the Droid X is 720p, which I far as I know is HD. No need to strap on your big boy boots and come in here and attempt to make people feel inadeqaute.
/rant
I'm glad you figured out your problem OP!