The application currently I am using has a main functionality to scan QR/Bar codes continuously using Zxing library (http://code.google.com/p/zxing/). For continuous frame capturing I used to initialize the AVCaptureSession and AVCaptureVideoOutput, AVCaptureVideoPreviewLayer described in the apple Q&A http://developer.apple.com/iphone/library/qa/qa2010/qa1702.html.
My problem is, when I used to run the camera preview, the image I can see through the Video device is much larger (1.5x) than the image we can see through the still camera of the iPhone. Our customer needs to hold the iPhone around 5cm distance from the bar code when he is scanning, but if you hold the iPhone to that parameter, the whole QR code won’t be visible and the decoding fails.
Why is Video camera in iPhone 4 enlarges the image (by seeing through the AVCaptureVideoPreviewLayer) ?.
I am answering my own question again. This was not answered even in Apple Dev forum, therefore I directly filed a technical support request from Apple and they have replied that this is a known issue and will be fixed and released with a future version. So there is nothing we can do more than waiting and see.