You're talking about people who solely use a camera phone to send pictures to friends and relatives. I'm talking about people who use a camera phone instead of a digital camera with the intention of printing their photos out at a later date.
Unfortunately that's an art that appears to be in drastic decline. It's extremely rare that your 'average joe' will want to print off the sort of pictures they are taking on these camera phones. But when you've got people spending money on a phone specifically because it purports to be a brilliant camera; those are the people that will be disappointed.
Like I said before, until someone has the foresight to release a camera phone with a smaller megapixel rating, a larger CMOS chip, better light sensitivity, a faster shutter, a proper flash, optical zoom and high-quality optics in the lens, camera phones will be largely novelty items. Otherwise by the time we start to see double-digit megapixel ratings on camera phones the only people that will be benefiting will be the makers of memory cards.
As for your image, for a 5MP sensor it's awful. Seeing as it's shot at f/2.8 I can forgive the lack of sharpness but seeing as it's shot at an ISO of 64 I can't forgive the IQ. There's noise everywhere, colour-rendition is awful and fine detail is almost lost completely. That might be double-dutch to you, but given those settings (f/2.8 and ISO 64) the image should have a sharp focal point (somewhere) and be extremely detailed.
Alas, that's pretty good for a camera phone. But it would be inexcusable in anything but the cheapest digital camera.
Despite my annoyances, I don't have a problem with camera phones or the people that use them for what they are. They're great fun and a fantastic way to share photographs. I just don't like the way they are marketed.