diffraction makes most of the 5mpix unused. all the details disappear and small sensor makes much noise and noise removal removes rest of the details.

there is about nothing significant to do with software with cameras integrated to cellphones etc. and decreasing jpeg quality probably makes no realistic difference....

a small example:
you can stretch this heavily cropped (100% crop) image taken from 4mpix raw image data about 2-3x or more and the quality is better than with N900's 100% crop.

in wide mode the camera is better than 4/3 mode.

In the 5 mp mode, the images are not vivid such as in 3.5 mode.

I did many test and when i will time, i post some example