Update:
With iPhone OS 3.0+, the whole UIImagePickerController API has changed. This question and answer should be considered 2.2. legacy code.
When using
This appears to be a hindrance of the SDK, at least when setting the allowsImageEditing to TRUE on the image picker. There's a bit of discussion on this topic in the Apple forums here:
http://discussions.apple.com/message.jspa?messageID=7841993