Why my iPhone 4 photos turn out white/blurry with flash on?

Not too long ago, I changed my handphone cover as the existing one was getting a little worn out. Little did I know that that was the culprit to my whitish/misty photos.

I've noticed for the past few weeks that the photos taken with my iPhone 4 have been bad, especially with flash on. Every photo taken with flash on turns out misty/ with a white layer over it. It was not like this before. Did I drop it that cause it to malfunction? No... Was there a bug in the previously software update affecting the camera function? No idea... This has been bugging me for a while.....

Today, i decided to switch back to my old hp cover. My new hp cover for some reasons seems to get dirtied easily. (Maybe because it's of rubber material whereas my previous one was of plastic material and didn't have such an issue.) And when I tried taking photo with my iPhone 4 after the change of cover, accidentally with the flash on, the photo turns out alright! Hmm... Strange!

The thought came to my mind... I have only changed the cover and did nothing else. So I decided to experiment. 

I put on my cover 2 (the rubber one) and snapped. Result: Blurr/misty. 
I put on my cover 1 (the plastic one) and snapped. Result: Clear!

Mystery solved! 

Cover 2, bye bye :(

Blurred. Notice the photo turns out whitish?

Clearer. No more white layer.