Camera chain Jessops has confirmed that it's to shed 550 jobs and close 81 of its high street stores in response to pre-tax losses of £25.2m for the six months to April 1.

Naturally analysts have pointed the finger at the growth of online stores, just as they did when Dixons vanished from our shopping centres last year. But Jessops can also put its decline down to the fact that almost everyone now has a digital camera in their pocket, squeezing out the demand for the cheap, compact digital cameras that both stores once shifted by the barrow-load.

In little over a year, the standard resolution for a new mid-range camera phone has leapt from 1.3-megapixels up to 2MP, and a spate of 3MP devices - Sony Ericsson's K810i, Samsung D900 and Nokia's N73 - just a few months ago has already been gazumped by the promise of 5MP camera phones: Nokia's N95 is already with us, and Sony's CyberShot-powered K850i will be here in time to capture those magical Christmas moments.

Camera phones are small, convenient and increasingly powerful. Too convenient, perhaps, if you've ever stood behind the amateur cameraman, his hand and phone waving in the air, videoing a gig you really wanted to see with your own eyes, rather than via his mobile phone screen.

Even the problem of how to get your photos off the camera has been solved, with more manufacturers supplying connection cables with their phones, Bluetooth more widespread and services like Flickr and ShoZu letting you upload images to Internet photo sharing sites and blogs in a few seconds.

But can camera phones really replace dedicated cameras? At the most basic level, they already have. At 2-megapixels, camera phones are the digital equivalent of those disposable cameras beloved of wedding planners. Pop them on the table, take a few snaps and never mind the quality, feel the fun.

When 5MP camera phones become the norm - and at current rates, I'd give it 18 months - there'll be fewer reasons to buy a compact camera. The image quality of the N95 at full resolution is good enough to print, and the quality of the image is superb. Powered by CyberShot technology, Sony's K850i will be just as good, if not better, and dedicated camera keys mean that you won't feel like you're using your phone's camera application, rather you'll be using a proper camera.

Where camera phones do fall behind the compacts is in terms of optical zoom and flash. Compact digital cameras offer at least 3x optical zoom and up to 10x on some models, giving clean, crisp close-ups. Because of the need to squeeze as many components into a mobile case, and that a zoom lens is a space-hungry component not open to miniaturisation, we're unlikely to see optical zoom on phones any time soon. Instead, manufacturers sell us 'digital zoom', which degrades the quality of an image so much as to be redundant

Then there are indoor photos. Is there a greater waste of space on a mobile phone than an LED flash? We haven't seen one that doesn't leave a bright blue glare on the image, blinding the poor subject in the process.

Camera phones are great for opportunistic photos of celebrities in the street or news photos that you can email to the BBC while their own photographers spend your licence fee elsewhere. "Capture the moment" as one firm said, but if you want to capture it with any real quality, especially indoors, for the foreseeable future at least, you'll need a compact camera.