Seems all the "built-in" wallpapers are high res and look great. all the pics I've copied over and attempt to setup as the wallpaper come out low res and very pixelated.
Ahh took me a week to figure this out but when you crop, it blows up the image and deteriorates the quality. The key is to hold the corner of the orange crop box and drag it all the way out till it fits your whole picture. This will preserve the high quality and resolution. Trust me it works. I have a very high resolution pic made for my 24" monitor, loaded it on the phone, then dragged the crop box all the way out till it captured the pic, with the execption of some of the width, and it was super high res and looked amazing on my homescreen.