Front camera on Nexus 4: no HDR, and downgraded from 2MP to 1.2MP? In Nexus 4, why is the front camera downgraded to 1.2 MP only, as it was 2MP initially? And also, we had an option of HDR in that as well, which is absent in Lollipop 5.0.1?
From GSM Arena, the secondary (front) camera has 1.3 MP, and the camera settings provide 1.2 MP as the highest, so I'm not sure if it was 2 MP before. (Camera resolution is related tightly to hardware capability, so it's strange to be able to have higher resolution in the first place).

As for missing HDR, it seems it's caused by Google Camera, as reported by other on Google Product Forum. Google Camera is the default camera app on Lollipop. Previously, Android uses AOSP (Android Open Source Project) Camera as the default camera app, and it supports HDR on front camera. The intended solution is to use AOSP camera back, as some people have ported and published them on Play Store, since it's open-source:


Nexus Camera: KitKat Camera (free)
Camera KK (adware)