I know this is months and months after the original post, but after observing the camera results from the iPad 2, I'm inclined to agree that it probably IS a software/fixable issue... to a degree. I mean, it's a pretty crummy camera. Less than a megapixel. But the graininess is something else. Note that the 720p video doesn't look as grainy - and it is from the same camera.
What I *suspect* is that, in order to make more 'usable' photos in even lower light or shaky hands, Apple set the default/locked-in sensor sensitivity really high. (Think ISO 1600 or so) for the stills. This means that you're going to get a noisier photo, but one that is less blurry. I do not have an iPod touch to compare with, but It makes sense that they'd worry more about blurry photos from something as unwieldy for photography as an iPad vs something that can be held easier, like the touch. Since blur isn't really an issue for video, they could drop the ISO down to something more reasonable when recording.
The best fix they can probably do is to put ISO controls in the Camera app, to let the user choose if they want blur or image noise. If you've got the iPad standing up in a case and it is stable, blur won't be an issue anyways. That's when you'd set it to a lower ISO. If you are hand-holding it, you'll probably find that the grainy photos are more usable than the blurry ones. I'd have preferred much better cameras, but failing that, ISO controls are about all we can hope for.