The iSight camera continues to get even better, and thinner.

At today’s event in San Francisco, Apple announced that the iPhone 5′s camera is the same 8 megapixel shooter found in the iPhone 4S, but thinner and with marked improvements.

New features in the camera include a dynamic low-light mode, better aligned lenses, and a sapphire crystal lens cover. Sapphires are very hard and should make the cover more sturdy. The newly announced A6 chip will also help with noise reduction, 40 percent faster image capture, and better low-light performance.

The iPhone’s camera was christened with the iSight name back in March after the new iPad was introduced with a significantly improved camera.

And as an added bonus, the just announced Panorama mode will be coming to the new iPhone and iPhone 4S. The 360-degree mode will capture images that are 28 megapixels in size. The feature works by turning the iPhone vertically and quickly sweeping the scene. Users can then swing their phones. Even if there is weaving or shaking, the iPhone will automatically repair the picture.

We’ve known for a while that Apple has been interested in adding the feature into the stock camera app. A panorama mode was “hidden” in iOS 5 but could be easily found, even without a jailbreak.

While there are numerous third-party apps in the App Store that feature a panoramic mode, like 360 Panorama and AutoStitch Panorama, adding the feature into the Camera app should definitely make 360-degree photography more common.

And the new camera will improve video capture as well. Videos will still in 1080p, but there is better image stabilization and facial recognition. Users can also capture still photos while taking a video at the same time.

The front-facing camera has also been improved in the new iPhone. It is now a 720p image sensor and backside illuminated.

Apple’s Phil Schiller also showed off the Shared Photo Streams feature where you can show off photos to family and friends and comment.