In its simplest form, The best camera phones to date have had xenon flash. This is fact. If someone produces a better camera phone that can take better pictures in all light, Great. Time will tell.
Based on your comments it seems you would do away with all flashes on camera phones. Your argument is founded on an LED flash system that has not been produced and even more important, not used in real world situation. We dont know the costs related with your suggestion of LED or the cost/complexity of shutter and mechanical changes that you suggest for camera phones.
My argument is based on the phone that I have in my hand, and the fact that it does what I want it to do, partly because of the xenon flash. Its that simple.
Why do you think Nokia did not release the N82 with 3G. After releasing 4 versions of the N95 (now five with the n85, and six, the n96, and soon to be seven with the n86) why did they leave this one feature off this phone, I doubt that the 3G radio would have changed the size of the n82, yet it would have enhanced the use of this phone extremely. Makes no sense to me. That is why it would not surprise me if nokia released its new imaging king, that took worse pictures than its previous imaging king. I have history on my side. You have a report on an LED system.
I also noticed that you don't list a current phone in your signature. Just curious, what phone do you use. Do you have any experience with the N82??