I would love an upgrade to 4 or 5 megapixels in the next iPhone. I never ever carry a camera, but I've noticed since I got the iPhone that I take pictures quite often. I just wish the pictures were better than 2.0 megapixels with no zoom.
The chip rumored to power the 3G iPhone's multimedia supports up to 5 megapixels, and that probably wouldn't be a huge cost increase. It still wouldn't be as useful as even a basic standalone digital camera, without flash, zoom, custom settings, etc., but like I said, I don't carry around a camera anyway, so this would be very useful for me.