I own an Xperia Neo which one of the posters before listed as one of the phones with the same sensor as the iPhone 4S. Do I use the camera? A lot!
But as always, if this "suffices" really depends on your requirements for a carry-everywhere camera. In the regard that you nearly always have it with you, the iPhone certainly wins. If you will be happy with the image quality largely depends on what you are planning to do with those images, and what the shooting situation is.
Real life example - this summer I stumbled into a staged "fox hunt", and tried to capture some images as I would have with my DSLR / larger gear. Best photo (follow the link):
But, best action shot of the same event (follow the link):
Ok, I used the sports program of the camera, which didn't (to my suprise) raise the ISO, but kept ISO at 100 and thus chose a 1/100s at f/2.4. But the wide angle lens (and no zoom) made it hard to get closer (without being trampled), and the shutter lag rendered many shots of jumping horses useless because they were not correctly framed.
Worst problem - using the camera a lot sucks up battery, and after a while of shooting I ran so low I couldn't even phone my wife to tell her I would be late because I had met the fox hunters...
Do I use it as an everyday camera? Yes, but for, say, ambitous amateur level photography, I even disregarded all compacts for lack of image quality and chose an Olympus Pen with it's micro four thirds sensor. Different league in all respects of course. (More on my findings with the Pen in my blog article about my solution to the carry everywhere camera problem: http://www.alpenglow.info/2011/02/12/my-solution-to-the-carry-everywhere-camera-problem/
Update - I was so frustrated with stackexchange's limit of inline images for new users I turned my answer into a blog post with nicer layout at http://alpenglow.info/2011/10/19/using-a-smartphone-as-a-carry-everywhere-camera/
One more update - thanks for voting this answer up, now I could inline the images here as well :-)