HDR was added to the iPhone in IOS 4.1:
Take great photos that capture a wider range of light intensity using the new high dynamic range (HDR) setting on iPhone 4, which automatically combines multiple exposures into a single HDR image.
So it seems that this is using the multiple image exposure blending approach to HDR. Other than a reduction in contrast, are there any other side effects of this process to keep in mind when choosing whether to use HDR on the iPhone?
