The camera has been improved to bring a more realistic depth-of-field rendering thanks to a better tilt-shift functionality. As Instagram said on its blog, "In the past, there had been vast differences in the effective strength of the blur between the preview screen and the output in your feed and camera roll. With this update the blur you see is now the blur you'll get!" There is now an optional grid guide for live photos and a permanent grid guide for the "Scale and Crop" page. There is also a new Welcome Screen, and on iOS, filtered pictures are sent to a separate portion of your camera roll called Instagram.
This all comes ahead of Twitter's expected update that will add photo filters to the messaging service. Starting this past weekend, Instagram disabled its support for Twitter cards and no longer shows Instagram pictures in the Twitter stream as the two former friends become the app version of Apple and Samsung. The Instagram app is available for free from the Apple App Store (version 3.2) and from the Google Play Store (version 3.3).
source: Instagram via AllThingsD
New Crop screen (L) and the difference between no tilt blur and using a high-quality tilt blur (C-R)