As Kevin suggested,
Where HDR is great (and where it’s intended to be used) is in extreme contrast scenes where your important detail is going to be either blown out in the highlights or obscured and noisy in the shadows.
I went back to my photo catalog to look at some of the photos I had taken with the iPhone 4 camera later that day. The photo below is the normal iPhone 4 camera photo untouched. If you look to the areas just to the right of the word coffee you will see how the shadows prevent you from seeing the details in the cars wheels. It is also difficult to make out the handle near the top of the coffee sign and nearly impossible to see the rivets in the frame of the sign (near the top).
The photo below is the same photo shot with the HDR feature of iOS 4.1. Notice how we can now see more of the spokes on that wheel and the handle of the sign is now much more noticeable. You can now clearly see the rivets in the sign’s frame.
Just to make sure I understood what I was doing I shot a few more photos this morning around my home making use of the early morning light coming in through the windows.
This photo is the normal iPhone 4 camera image. The highlights in the seat are all blown out and we can see no detail in that part of the image.
In the HDR image we can now clearly the wood grain in the seat and leg of the chair.
I want to thank Kevin for writing that article. It made me take a second look and realize where I was making mistakes. This is a great example of where it’s not the camera it’s the person behind the lens (or touch screen). I encourage you to click the link and read his post in its entirety before using the HDR feature on your iPhone 4.