I am beyond annoyed with this. My wife and I have also taken to swapping photos of the kid by e-mail and gripe daily about the lack of MMS on the iPhone (which forces us to have another phone just to send pics to the grandparents), and now Apple lets this one past QA. Just goes to show you that ignoring common services and/or use cases on a phone is not the way to keep your customers happy (link found via just as I was going online to check if it was a known issue).
Update 1: Filed as [#6395047], also on OpenRadar. For good measure, I also filed [#6395035], [#6395041] (minty fresh annoyances that have started happening since I upgraded yesterday) and [#6395732], [#6395733] which have been bugging me for ages (and that also pertain to MobileMe).
Update 2: Fixed in iPhone firmware 2.2.1, released on 2009-01-27 as an interim update in the 2.2.x series.