We had a similar issue relating to images a couple of weeks ago. What we found was the original quality of the image was poor to start with, and the size of the image was not big enough.
If you check the resolution of your images in say, windows picture viewer by selecting - image - image properties, this may determine whether you need to find images with a higher resolution. At least 300dpi.
Secondly, once this has been established, you need to amend your images in say Photoshop, Gimp or PiXlr, to the correct size for the image holders on your site and at the same time, decrease the image KB when you are about to save it, without affecting the quality too much, as not to slow your site down.
Hopefully, having a decent sized image with a good quality resolution may do the trick.
2. Set "mediasettings.defaultimagequality" setting to "100" (admin area > configuration > all settings)
Sorry to resurrect this old thread, but I was wondering if option number two above is recursive. If the images already exist in the Pictures table, will setting the defaultimagequality to a higher value affect the image quality?