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Just get yourself an iPod touch and you can have the "attach photo from photo library" functionality you desire. You just lose the ability to take pictures and, uh, oh yeah, make phone calls :)

It is puzzling that they went to the trouble of adding the ability for the iPod touch to select photos from the library and yet didn't add it for the iPhone. Maybe as Dennis suggests, the API designer threw in the ability to get a photo from the library as a consolation to the iPod users and never contemplated the possibility one might want to use a photo (or screen capture) from the library instead of taking a picture.