I have a Nexus 5 at the moment and while the pictures are not amazing, what boggles my mind is that the camera sensor and the phone's screen don't have the same aspect ratio!
It usually makes more sense for sensors to be closer to a circular shape (i.e. square aspect ratio) because the image projected by the lens is going to be circular anyway. So if you have a very wide sensor you lose a lot of light on the top and bottom in order to expose the sides correctly.
You can just crop it if it bothers you. The lenses throw a circle of light, so the farther the aspect ratio gets from 1:1 the more lens you are wasting. What surprised me was the new Blackberry has a square (1:1) screen but doesn't capitalize on it with a 1:1 camera sensor. Probably they couldn't source a decent sensor with that aspect ratio.
Worth noting that this is the case across most compact camera devices. Most smartphone camera sensors are 4:3 (e.g. iPhones), while the screen on the device is often 16:9 or 16:10. In contrast full-sized SLRs are usually 3:2 owing to the 35mm legacy.