I think not-enough-attention having been made for the built-in camera app in Maemo5. Those app's programmers have every access to the N900 hardware, kernel, or drivers or whatever, and financial supports to make things work properly. They should rework the application harder.
I reflash to PR1.3 and now everytime I slide the lense cover, my music paused. The music flicked and continued to play in PR1.2 but now you have to close the lense or turn off the camera app first. It may be some bug from the media player daemon anyway but ...
Some apps for the front camera capturing will pop up in extra-dev sooner or later but come on Nokia, it's your hardware, make it work first before having the job done by other people you dont pay for.