We're looking at one for dd's 12th birthday...I don't even think she knows it has a camera but she does enjoy taking pictures, so if it's complete crap I'm willing to pony up the price difference. On the other hand we are on a budget!
It isn't bad. Granted, I am not a photographer, but my dd likes using her ipod touch 4th gen for pictures. She has had many printed out and they were nice. I wouldn't expect posters from the quality, but for everyday snapshot usage, it's not bad. I do know that she had to play with the camera settings to get it how she wanted it. Once she did that, she hasn't complained.