Carl Zeiss is a very well respected lens maker, and very literally one of the reasons "German engineering" conjures images of precision and care. Camera phone manufacturers license the name (and, maybe but not necessarily, actual lens technology) from Zeiss in order to borrow some of that high-end image.
This isn't necessarily all chicanery: companies who are doing this are at least somewhat interested in appearing to be high quality, and the name isn't completely diluted, so you have a reasonable expectation that if the lens says Zeiss, it's probably above run-of-the-mill.
In the case of the N900, the lens is quite good for a smartphone, and more importantly, the sensor is relatively large. 5mpix is a decent resolution for that size of sensor — at this point in the technology, you're not going to get a lot out of having more.