If you thought it was very odd that Google improved pretty much every app in KitKat, including the old e-mail app, but left the camera app untouched, even though it has received much criticism, not just for its very poor and clunky circle UI, but more importantly for its photography performance, then you aren't the only one.
Android cameras have been criticized for a long time, but it was never really obvious whether it was because of stock Android's camera API's or because Android OEMs just didn't really care about camera performance that much, and all thought they needed to compete on other factors (which was entirely possible, since a lot of the time Android OEMs tend to have a crowd mentality, and instead of trying to innovate away from each other, they try to do mainly all of the same stuff).
But when I saw how poorly the Nexus 5's camera was performing, it was further evidence that perhaps all this time, it really was Google's fault that all Android OEMs could barely compete in the camera department, unless they did very heavy customizations to Android, or used much more powerful camera hardware.
The fact that Google didn't add seemingly even one line of extra code to the camera software in KitKat, was also quite suspicious, and I thought that maybe they were preparing to overhaul it perhaps in the next version. It seems, however, that they were about to overhaul the camera software in KitKat, but like many projects that should've arrived in Android by now (I believe KitKat was originally supposed to be Android 5.0, and have more features, but many didn't get finished in time), it got pulled out of the Android code about a month earlier, accompanied by this comment:
DO NOT MERGE: Hide new camera API. Not yet ready. Bug: 11141002
This new camera API was supposed to bring the RAW file format, which is basically the uncompressed image, that can be manipulated much easier by image editors. However, it uses much higher storage space, so it's not going to be very useful to the every camera user. However, my guess is Google intends to showcase how good Android cameras can become in the future.
It would also make Android much more appealing to camera vendors such as Samsung, Sony, Nikon, Canon and so on, who may decide to put Android in some of their cameras, and eventually perhaps even collaborate with smartphone OEM's, which is something I've been hoping for a long time. A partnership between Motorola and Nikon, or HTC and Canon, could be very interesting. Now, we'll have to wait until the next version of Android to see all of this unfold. Perhaps, Google will even make it so you'll be able to download the overhauled camera app in the future, which would also be very interesting.