This is the suggestion they provide on O2 website for such problems:
Perform a soft reset (PDA phone) or re-boot the device (Smartphone) and test again.
Perform a hard reset (PDA phone) or return to default settings (Smartphone) and test again. (read below before dong this)
Check that the application still fails to execute after you upgraded the ROM (OS) to the latest revision. If you haven't upgraded your ROM (OS) do so now and check again.
But before doing the hard reset, I suggest you try installing other camera software for windows mobile 5 and check if the camera still working (not a hardware problem). If its still fail, try the hard reset after backing up all you data.
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did you made system restore to your xda or to your laptop ? if you made system restore to your xda (hard reset) -there is not a lot you can do try to take off the bat and than again hard reset to your xda
At the expense of your data-loss,
atleast you get your device working back.
To perform a hard-reset on your O2 Xda Atom,
Keep pressed the POWER key, and then perform soft reset. After the device this leave everything and confirm that you want to hard-reset as shown on the screen.
I had the same problem. The issue seems here that the battery keeps getting honked off. I changed my charger and did a defragment and also did some files sytem clean up using Pocket mechanic. That solved the problem.