Me and My Mac

The HTC Desire wins.

Both need a dedicated hardware camera button, the iPhone needs one more.

These photos were taken either side-by-side, or consecutively (seconds apart).

Test One
- iPhone Pic 1
- Desire Pic 1

Test Two
- iPhone Pic 2
- Desire Pic 2

Test Three
- iPhone Pic 3
- Desire Pic 3

To me - its clear cut.  More megapixels, and a better lens.  Sky over-exposes often on iphone, but not on the desire. (you can even see an eyelash on the c on my keyboard)

Plus, the desire has an LED flash.

HTC Desire 4 - iPhone 3