If you ask any photographer whether they would be willing to take photos with a fixed focal length lens, many would say 'yes'. Prime lenses are as old as photography itself, and there are many excellent reasons to embrace them. Ask the same photographer if they'd be happen to work with a fixed-aperture lens, however, and you wouldn't get many good responses.
And yet, this is the reality of taking photos with an iPhone 4: It doesn't matter how bright or dark your scene is, you're stuck with a f/2.8 aperture lens. This is a problem if you want to use the iPhone with an external flash (not that you could anyway - here is why) - but how does the iPhone cope with extremely bright situations?
The lower limits
As you (probably) know, an exposure is controlled by 3 factors: ISO, Aperture and shutter speed. If aperture is fixed, you have to deal with any lighting situations with the other two. In low light, the iPhone will ramp up the ISO.
In fact, if I press my iPhone against a dark surface and take a photo, the camera reveals its limits:
This incredibly boring photo reveals the limits of the iPhone's camera: It won't use slower shutter speeds than 1/15th of a second, and it won't go beyond ISO 1,000:
The upper limits
Similarly, it's easy to test the iPhone's upper limits, by pointing the camera at a ridiculously bright light source. The sun will do. This photo:
... Reveals the other set of extremes:
... Which is that whilst the iPhone is still stuck at f/2.8, the maximum shutter speed is an incredible 1/30,000th of a second.
Putting these two figures together (about 4 EV steps of ISO and another 11 EV steps of shutter speed) reveals the exposure range available to an iPhone photographer: an impressive 15 stops of difference from the lowest light to the brightest lighting situations.
Of course, this is nothing compared to the extreme shutter speed, aperture, and ISO ranges of modern SLR cameras, but hey - it's not bad for a device you keep in your pocket at all times!