Sadly, I hear this all to often. What can you say to this? YES, certainly a Phone is a handy device. More than likely you have it on at all times and as Chase Jarvis says, "the best camera is the one you have with you", at least I think Chase thought that up. However, NO your phone is not better than a camera. The final output is so much better with an actual camera. Now I have been promoting the use of a phone as a cool imaging device, and that's what it is, Cool, Handy, Quick, Convenient. Sometimes, if the scene is right, it can be hard to tell a phone shot from a camera shot, but it doesn't replace a real camera.
Below are two images of the same scene, but dramatically different in look. One from my Nikon DSLR, and the other from my Samsung Galaxy S Phone.
In my eyes the more intriguing image is the first one. Its far more interesting with the wonderfully shallow depth of field that can be only created by the superior talents of a real camera, I could probably add some fancy action to the phone image, like a tilt-shift effect to make it more appealing but I still don't have the in-camera control to get the shot the way I want.
So, Yes a phone creates fun images but a REAL camera creates much BETTER images as long as you are willing to learn it!
Further to that... here are two images below. One with my phone and one with another camera, cropped to almost the same shot and both straight out of ummmm, well Camera!!!! Can you tell?