Well, I had to take the plunge to find out but - it looks like a hardware problem.

I've been having problems with my camera from the start on my 16Gb 1.1.4. All I've done is JB and A with Iliberty and have had no other problems except the camera takes sloarized looking pics. They don't show up as solarized in the contacts menu, or slideshow or when loaded onto the computer, but do in camera roll and immedately after being taken.

I havent been sure if it was hardware or software, or something caused by the jailbreak. So, I did a DFU restore to 1.1.4 and activated for real with Itunes and picked a pre-paid plan (failed CC) .

Sure enough when my phone was activated legit, everything worked fine but the camera was still messed up, so it must have been a hardware problem all along.

So I made a genius bar appt for tommorrow afternoon, and will go in with my legit activation and get my phone replaced. Then leave with it sealed, and go right to the ATT store and cancel my service for a refund - telling them that I'm not sure if I want to keep this phone and am pissed off that my first one was broken, so I'll cancel my service and think about it, etc. Then it's back to iliberty and hopefully t-mobile then, where I've always intended to go.

My best advice would be to, at least at this point, in the face of a warranty problem,or some type of need to claim the warranty would be clean DFU restore, and sign up and cancel right away. At least then you can walk into the apple store with your demands and a leg to stand on.

Hopefully the rest of this all goes as planned, and I'll post tommorrow to let everyone know how this works out.