I use instagram on android and I rarely use the camera that is within the instagram app. Not sure this is as big of an issue as its being made out to be.
I also prefer to take my instagram photos with an app that has a few extra features (stabilizer, countdown timer) and then import them from there - however think about the technical difficulty of building an instagram-like app (social networking and attaching a camera snap) versus serious productivity software or a high-performance game.
To me this is troubling because their actual app should be really simple to implement. If they can't/didn't get something as simple as using the camera from an app but they managed to get in all of the photo transformation and retouching that makes me wonder if developing apps for this platform is trickier than for iOS or Android.