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.
Mom to three very active girls Anna (14), Kayla (12), Maya (8).