Yes, the unit's camera flash worked properly. I made sure we tested that out before I accepted it. 🙂
The service was excellent - my name was called right on time, I worked with the Apple representative, he tested the camera several times, then asked if I would take a replacement, new unit. Once I agreed, he erased my phone, brought out the new unit, and I left the store after about 15 minutes. Once home, I restored the new phone using iTunes and the backup I'd made from the original iPhone 5, and everything was flawlessly restored.
I'd originally debated buying a Samsung Galaxy SIII, but decided to go with the iPhone 5 instead. I must say, except for the episode with the camera flash on this one unit, I've been very happy with the decision. Now I'm just waiting for Apple to come out with an update that will give us a Maps app that will work better! 😉