An LED used for camera flash would be a nice to have option, but given the limited space in the iPad body, it wasn't that big of a necessity. I personally would never use the iPad as my typical photography device. I have my iPhone 4s and Nikon point n shoot for that.
However, the camera is an EXTREMELY useful function for my needs. I use it to scan documents, notes, and articles for future reference. Here are a couple of common scenarios for me. In my other profession, I'm a personal trainer. I'll use my iPad to snap a before pic of a new client, open it in a note taking app like notability and make comments directly on the photo (target body parts, past injuries, weight, BF%, etc) and store it in the client's file. If a colleague has a question on exercise form, I can easily snap a photo of the start and end of the movement and annotate the pic, circle areas to pay attention to and draw arrows to where correct position should be, and email it to said colleague. If I'm at a certification course, I can snap a pic of the instructor's notes on the chalkboard to use as a reference to my own notes.
The camera on the iPad has opened up a lot of productivity and convenience uses, and not just for conventional photo taking. I'm glad that the resolution has been improved from the iPad 2. I wouldn't mind having a flash, but I can live without it. Especially if it keeps the cost of the iPad down.