Well that just stinks. I tried two other camera apps from the market with the same results...focused image at 6 inches, otherwise blurry. Factory reset didn't fix the problem.
I purchased the device from ownta.com....any idea how good they are at returns? Always makes me a bit nervous when throwing around this much money and dealing with international sellers. I will have to send it back. Terrible...I will have to go back to my HTC S743 until I get a replacement. I can't tell you how painful that is going to be.