I had this battle for a long time... cursed the iPhone, Mr Gates... etc... Finally found a package and a thread where the guy stated emptying the camera roll... yes, deleting every picture... didn't like his idea, but began to think about the iPhones directory structure.
Long story short...
I tried a package I found called: iPhone Explorer
Some info:
Visit us at www.iphone-explorer.com
Version I tried is 0.992
The software is not well documented, and if you are as applelost as I am, you may struggle a bit too, but after I figured out everything is under the DCIM folder, I was stepping in tall cotton...
Once the iPhones structure gets filled with left over diretory structures, it appears the Microsoft Scanner package gets confused...