I have a 3GS & always listen to my music by album, not artist.
If I touch the iPod symbol, then goto more, albums - it takes me to the Albums screen, which is great. I can play the albums with no problems from here.
If I then turn the iPhone on it's side to initiate the Cover Flow, it sorts the list by artist, not album.
If your like me & have a load of compilation CD's (i.e Ministry of sound for instance), I'll have say 100 Ministry of sound album covers displayed, each one covering 1 artist !!!
Can't you just change it to display the actual CD album itself ??