The iPhone’s camera app is pretty good for shooting stills, and I consistently get sharper pictures with better white balance than I do in any other apps. But for shooting video, it just plain sucks: the crop factor (which lets image stabilization do its stuff) makes indoor shooting hard, and you have almost no control over anything but focus.
So do yourself a favor and go spend a buck on CinePro, a video-shooting app that gives you all the control you need.