The native camera application in Android is, if we can be honest with ourselves, a little wimpy. Yes, it's certainly made some improvements since 2.2 came along, but when you compare it with an app like Camera 360 (free; Pro version, $3.99), it's downright pathetic.
Camera 360 is like your native camera app on steroids. Side-by-side comparisons with Android's camera app give Camera 360 a clear edge in picture quality. It just seems to be smarter when it comes to light and focus. Not only that, it's faster. In my experience, Camera 360 loads up almost twice as fast as its native cousin. That in itself is reason enough to upgrade, but is only the beginning.
Camera 360 has a number of modes: Normal, Shift-Color, Tilt-Shift, Funny, Scenery, and Effect; and there are a ton of settings (submodes, really) within each. To cover all of these in-depth would take pages upon pages, but I'll try to hit some highlights.
In Normal mode you can do things like choose color, B&W, sepia, negative, solarize, and various tints. These all work well, and can be nicely subtle. In Effect mode you can choose from Lomo effects, Lightcyan, Reversal Film, Simulated HDR (High Dynamic Range), Dream effect, and many others. "Back to 1839" is one of the coolest effects in this mode (Pro version only); it will make your photos look as if they had been shot 150 years ago.
Funny mode offers some of my favorite options. Line Sketch does an incredible job of making your photos look like pencil drawings. Surrealist Painting does the same sort of thing, but gives a bit more detail. Both are great effects that really wowed everyone to whom I showed them.
In Scenery mode you can put pictures into a template and then apply an effect. The default template is a man painting on the street. The photo goes on the canvas, in Surrealist Painting mode, so it looks like a half-finished painting. Additional templates may be downloaded from the Market.
Tilt-Shift is a really cool effect that makes your photos look as if they had been shot with a much higher-end camera. You choose what you want to have in focus, then the rest of the picture is a little blurred so it looks like you have a narrower depth-of-field. Slick. All of these modes have different focus options including the much-coveted (and absent from the native app) touch-to-focus.
Sometimes with other camera apps, I've taken a picture using an effect, and then later wished that I hadn't used the effect. With Camera 360, you have the option to save the processed picture and the original image at the same time. That's a great addition. What's truly incredible about this app is how quickly it applies its effects. Even with some of the most complex ones, it's still just a matter of seconds before you can take another shot. (I tested the app with a Motorola Droid. Newer phones may have even better results.)
Options to control zoom, flash, white balance, timer, night mode, and focus are just a touch away regardless of what mode you're in. There are tons of options within the settings, too, enabling you to really customize your image. Another nice feature is that you can choose the directory path for your saved images. For example, you could save your photos to a Dropbox folder, and then you'd always have your photos synced in the cloud.
I'm not sure I found any real weakness in Camera 360, frankly. You can set it as your default camera, but I have not yet been able to figure out a way to have the camera button on my Motorola Droid open it. Instead, I have to use an icon on the home screen. Not the end of the world. Some of the effects could use a little tweaking, but most are very solid. The free version is very good and is definitely worth a try. If you want even more effects (and some of them are great), you may want to pay for the Pro version ($3.99), so you can really make your friends jealous.