How do I download photos from my iPhone?
When I connect my iPhone to a Windows machine, it does appear as a digital camera and allows me to copy files from the DCIM folder or to use the "Import Pictures" option from Windows.

I just tried this in a Windows 7 VM and was able to view all the pictures in my Camera Roll.
From there, I could drag and drop pictures to my desktop.

I don't have iTunes installed in the Windows 7 VM.

It works the same way in my Windows XP machine, at work. There it is a physical machine and I have iTunes installed, but I can copy the pictures from the iPhone without syncing, anyway.