Let’s just put this out there: the iPad 2 cameras are really pretty bad. They’re not unusable, but it’s clear that the sensors employed are not top shelf by any measure. If you have a fourth generation iPod touch with cameras, you can expect the same results. In fact, it seems to us that these are the SAME cameras used in the iPod touch — there’s an “HD” lens around back (which means it’s roughly a single megapixel shooter), and on the front you’ve got a lowly VGA cam. Neither one of these produces remotely satisfying results for still shots, and in particular (when compared with something like the Xoom), the back camera just seems utterly second rate. For video duties and FaceTime calls, the cameras are reasonably useful — but we would never trade a dedicated camera (or at least a smartphone with a 5+ megapixel shooter) for this.
In photography bigger and/or faster lenses mean more light. There is no other way to get more photons into the image sensor. But, the same sized image sensor can be improved to capture more light. These things are getting better every year. Image sensors are semiconductors and to some extent should follow Moore’s Law where photosensitivity improves x% in y months. There definitely were better image sensors for the back and the front that fit the iPad 2. What gets me scratching my head is why Apple didn’t think it was important to equip the iPad 2 with better ones than the iPod touch.