See how bright objects are not clear and sort of glow? (Like my son: he's bright but not always clear. Damn near indecipherable sometimes, but you just nod and say "Orly?")
Turn out it's simple: the lens was dirty. I have a hard case on the iPhone that made it pick up a a bit of dust. Nice case overall with a belt clip it slips in and out of that you don't have to use. It flips open for easy cleaning, so don't worry about that. Quick wipe of the shirt tail and you're done.
(I have the same one for my 1st gen iPhone.)
After cleaning my lens, this was the result.
No more fuzzy! And it wasn't that dirty, but the lens on the iPhone is so small, it makes a big difference.