I didnt find a good solution but I would not store the raw image in a property because the raw image takes up roughly 30MB of memory. So instead of:
self.image = [info objectForKey:UIImagePickerControllerOriginalImage];
I changed it to:
UIImage * image = [info objectForKey:UIImagePickerControllerOriginalImage];
This way the image is destroyed when it is no longer in use. Note: I've test this new method on iPhone 4 series and 5. The memory warning only appears on the 4 series not the 5.
From looking around the web there have been many bug reports submitted to Apple in regards to the Camera and iOS7. For instance, irregularly when you launch the Camera it will give a black preview - this is linked to iOS7, and more so the iPhone 4 series not 5. This is probably the difference in the processor power - but I am not sure. My app got approved for the app store so the memory warning will not be an issue –