It was camera "issue" something hardware I guess they changed it and now its fine. However I notice an empty file in the DCIM directory while copying the pictures back using scp:
.camera-ui.lock

Anyone have idea what is that file i.e. was this file causing the issue?

ls -latr .camera-ui.lock
-rwxr-xr-x 1 *** *** 0 2010-07-28 22:49 .camera-ui.lock


cat .camera-ui.lock

Edit:
Made a test, this file had nothing to do with the issue