Camera problems - hardware or software?

This Apple doc should let you know if it's software or hardware -> iPhone: Hardware troubleshooting

Camera is not functioning

1. If you do not see Camera on any of your Home screens (you may have more than one), check to make sure that Restrictions are not turned on by tapping Settings > General > Restrictions. If they are, set Allow Camera to ON or tap Disable Restrictions (in iPhone 2.1 software or later).

2. Ensure the camera lens is clean and free from any obstructions. Use a microfiber polishing cloth to clean the lens.

3. Third-party cases can interfere with the autofocus/exposure feature and the flash (iPhone 4 only); try removing the case if you have image-quality issues with photos.

4. Try turning iPhone off and then back on.

5. Tap to focus the camera on the subject. The image may pulse or briefly go in and out of focus as it adjusts.

6. Try to remain steady while focusing:

Still images: Remain steady while taking the picture. If you move too far in any direction, the camera automatically refocuses to the center. Note: If you take a picture with iPhone turned sideways, it is automatically saved in landscape orientation.

Video: Adjust focus before you begin recording. After recording begins, you cannot readjust focus until you stop recording. Exiting the Camera application while recording will stop recording and will save the video to the Camera Roll. Note: Video-recording features are not available on original iPhone or iPhone 3G.

7. On iPhone 4, if the issue is with the main camera, try using the front camera to see if the issue persists, or vice versa if you are using the front camera.

graciepup wrote:

I didn't restore as new. I'm not certain I know how to do that.

You can just disconnect the iPhone before choosing a backup.

See this for more info -> iOS: How to back up your data and set up as a new device

I am disappointed with Apple. Apparently the rear camera on the iPhone 4 has issues. I bought my phone on Christmas eve from an AT&T store. Out of the box the camera is not working. I called Apple and the tech I spoke to told me to call my AT&T store to get a new phone. Problem, AT&T policy is that they do not handle Apple issues at all per Apples request. I called back and explained everything AGAIN and was treated like I broke the phone and that they were unaware of the issue with the phones camera being a hardware issue. If this is a common issue why treat loyal customers as if they are at fault for their malfunctioning product. I am at a loss and am rethinking my loyalty to Apple. I have has Apple products for a long time and feel let down.

Did you try the basics from the manual?

Restart.

Reset.

Restore from backup.

Restore as new.