What's been done or being done about the photo bug in iPhone 2.2?

I don’t think it s a software issue – those cameras really aren’t great. Unless you’re in a well lit environment you’ll get blur unless you hold the phone extremely still. If you’re taking photos of close-up things (like the text on a book in front of you) it will never focus very well. However, there’s a new case from Griffin (which I’m waiting patiently for to arrive on my doorstep) that may solve the nearness problem for you.

Are you talking about this bug? If so, that will probably be corrected in the next software update.