I did a Google interview around then, and the interviewer photographed my code with an ordinary digital camera.

Did anyone have a smartphone that could take great photos in 2006?

Depends what you mean by great, but there were a number of phones with 2-3mp cameras, more than sufficient for a whiteboard.

And regardless it was an interview structured with a whiteboard, cameras (digital or not) had been things for a while, the company could gave provided one.

My Sony Ericsson K750 took pretty nice 1.3 MP photos for the time (launched 2005), it was better than my 1.3 MP Olympus Camedia C-860L from ca five years prior and was my main camera until DSLRs got cheap enough.

Nokia 7650 was released in 2002 it had camera, though picture quality is not great.

Cameras existed before 2006.