We have some good news for iPod Touch owners, we have a jailbreak tweak for you that will improve your camera`s quality. It`s called iPod 720p HD Camera. As described by the tweak`s developer:
iPod 720p HD Camera is a camera app based on Apple’s AVCam sample. It enables [an] iPod Touch with camera to take photos with a 1280×960 resolution.
In addition to the high quality, the tweak allows you to take pictures while in video recording mode as well as the ability to switch the camera while in use although the quality suffers.
Once installed, snap pictures normally with your camera by taping on the “photo” button. Change between exposure points by tapping on select areas in the preview pane. The photo will automatically be saved onto your Photo Album.
The tweak is available on Cydia under the BigBoss Repo for free. Of course, you will need a jailbroken iOS 5 tethered, for now, using redSn0w.