I don't think it is just the iphone the other thing that they don't talk about is that digital cameras were rapidly improving in image quality from the late 90's to the mid-00's. My digital camera from '02 takes total trash photos compared to the one I got in '05 but my '05 model is about on par with what I could buy today for a similar price so there is no reason to spend money on an upgrade unless it breaks.
The first is high-ISO: my Canon 40D can take a good picture at ISO 800, but my Sony NEX-5N can take a good picture at ISO 12,800, which is basically pitch black - think dark room by the light of a television. You can shoot available-light pretty much anywhere, particularly in combination with the image-stabilization tech and superfast lenses that are now available. Some of the newer sensors will get a good image up to 102,400 and can capture up to 409,600, which is just nuts. That's "dim moonlight" territory, basically night vision.
http://www.sonyalpharumors.com/amazing-sony-a7s-low-light-te...
The other is phase-detect pixels on the sensors. Previously many cameras had to use contrast-detect autodetect, where the camera racks the lens and samples the image for peak contrast on the target. Only SLRs had phase-detect autofocus, which was much faster and more accurate but required a separate set of sensors. But now they put phase-detect pixels right on the sensor, so you can get small cameras with fast/accurate focus.
Not the camera itself, but lenses have also come a long way in the last 10 years. Superfast f/1.4 primes and f/1.8 to f/2.8 zooms are now faster, sharper, and cheaper (and the idea of a f/1.8 zoom was unthinkable 5 years ago). On the high end Sigma's Art series are simply fantastic, and Samyang is raising the bar on low-end lenses too.