I've had a few pics in low light recently where the focus missed entirely (fairly certain it wasn't user error for a change!)
However, when it's on focus you can get some incredibly sharp images. I took this one at the weekend, we were messing around trying to bounce the flash and came up with a very quick and cheap hack.
We ripped up a white envelope, bent it so it was curling upwards and stuck it near where the on-board flash lives.
This was very sharp even at 100%, here it is reduced down to 1200*800:
Pic is of my friend Stu - I'll have to tell him to smile next time