I've never used one of the HDR apps, so I was eager to try out this new feature using iOS 4.1 on my iPhone 4.

Launching the camera now gives you an HDR option at the top of your screen. It's automatically set to off. When you toggle the option on, it will automatically switch the camera flash to off.

Using HDR will provide you with two shots -- one normal shot and one with HDR utilized. For my test subjects I used:

A shot of a window from a few feet away.
A shot of a window standing at the window.
A dark shot using the cat lounging next to the iMac as a model
A well-lit shot using one of the other cats, who happened to claim a kitchen cabinet as his own, as a model.