The argument that "iTunes isn't a photo manager" isn't valid. It is a photo manager and photo synchronization application, albeit a very simple and limited one. In fact, from what I can tell, it's the only app available for synching photos from a Windows PC to an iPod Touch.
How is it a photo management program? I can't use it to download pictures off my camera, I can't use it to edit pictures, I can't use it to organize pictures, and I also can't use it to even display pictures beyond album art in my music files.
You are correct that iTunes is the only photo synchronization tool for Windows. And I will agree that it might seem logical to have iTunes or the iPod read EXIF rotation data, but clearly neither do, and they rely on a proper photo management solution to be used on both Mac and Windows platforms. Odds are Apple looked at the situation and saw that the Windows Camera Import program does the rotation, as do the two Adobe products on Windows that iTunes can sync from, and so the logic was never added on their side.
It seems EXIF is going through the same initial implementation pains that ID3 tags did in MP3 files.
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