It's better than no camera at all! The images I make with my iPod are plenty good enough for the web, particularly if you goof with them a bit with a good app. It's easy to take a shot, tweak it, crop it and post it to my blog for a quick, fun comment on something while it's still going on, and of course the iCamera is excellent for grabbing a shot for future references when you see something weird or interesting.
Yeah, I take a few pictures of my fingers, but fewer than I used to, and it's easy to toss out anything that doesn't work. I find myself experimenting with this camera quite a bit-- it's no substitute for the real thing, but the experience of using it gets a lot better if you put a little time and effort into getting the most out of it. It works differently than a conventional point and shoot, but it doesn't work badly. And, hey, its lens a mild WA/normal prime in FF terms, just like "real" street photographers carry. It's no Leica, but you won't learn bad habits from it.
I love good cameras as much as anyone: have one now (DSLR), want another (large sensor compact/ mirrorless for daily carry), have had others (film SLRs) that I no longer use. Your mileage may vary, but I for one am not too proud to shoot with all the working cameras I own, particularly the one that is always in my shirt pocket.
