I just got the beta for Pleco with the OCR function (this is the Chinese dictionary/reader app I mentioned before). Just played around with it for a bit, not messing with any of the many settings. On the default settings, you need a steady hand, and it's best with text on a page/book. This works fine for me as most of my use would probably for quickly creating word lists that I can input into my flashcard program.
I played around with the settings more, and there's an option for Sauvola binarization that definitely looked like it allowed more leeway for steady hands, possibly allows for better reading of other text too (no screenshots of that though).
It's also pretty hard to hold the phone steady on a word, and press the home and sleep buttons at the same time to take a screenshot, without messing up the camera location.
Normal.
Vertical. Looking at a book binding.
Looking at my laptop screen.
White text on black background.
Not doing so well with stylish fonts.
Edit: For some reason, even though I resized all these in imagebucket, some are coming out full-size...