First of all, spend a little time with each photo using the various selection tools...youll get a much better image. Also, speaking as a graphics professional, I can understand why the color selection tools might be confusing for some, but it really is the best way to manipulate color in this app.
Some suggestions to make this a 5 star app:
1. Ability to save "works in progress" so you can continue editing or changing colors later
2. Be able to add color values numerically (for those color geeks like me out there)
Suggestions to make this the "killer" 5 star app:
1. Add database of paint manufacturer colors
2. Add Pantone colors
3. Add basic image editing controls like brightness/contrast (for cleaning up image before changing colors - we all know the iPhone camera isnt the best...)