Most iPhone users who had recently updated their handsets to the iOS4 have been complaining about getting all their photos either blurry in quality or totally corrupted which is a serious concern because Photos are considered to be very valuable and if all the important photos get corrupted, then you need to get them fixed asap. Here is a small trick using which you can get original quality pictures restored back in your device.
This issue has come up because iTunes compresses all the photos and stores them in the Photo Cache folder which once synced with the device would just transfer the low resolution ones and for fixing this you need to resync the same. All the photos are stored in your computer with 320×480 resolution along with the originals and when the first time restore is done, it just restores the low quality ones which may looks blurry when compared to the large sized original images. Uncheck all the synced photo libraries in iTunes, sync your iPhone. No photos will be present in your iPhone. Then re-check the libraries (or events) in iTunes and all photos will be re-optimized again and appear as they should.
1. Connect your iPhone to your computer and load iTunes
2. Select your device in the left sidebar
3. Click the Photos tab
4. Uncheck the Sync Photos check box
5. Press Sync to remove the photos from your iPhone
6. Once your sync is completed, recheck the Sync Photos check box
7. Press Sync to return your photos to your device.
This is not a bug but still Apple should have tried to offer a option for the iOS4 users to either select to restore the high quality ones or the optimized and compressed set. Similarly you can setup the Backgrounds, Multi Tasking & Folders settings on your updated device.

the only reason I tolerate this crapple B.S. is because the iPod is the only device big enough to store all my stuff. Some day the world will catch up and I will burn this lousy iOS junk once and for all. I detest the auto spell function. It never comes up with the word I wanted and I have to recheck text constantly god I hate apple