OK so this has been happening since 2.1 and a restore does not help. When I save an image, it shows up pixelated on my Photo app. Help me!!! this only happens sometimes, specially when saving a pic from mail.
Probably has to do with how big the photo is that you're downloading. If it's little then it has to get pixely to show full screen in the photo app. Do a Google Image search and pick the biggest one you can find- they show how many pixels each is under the photo. Don't download the thumbnail, click the picture and follow the links to the full size photo and then save it. If it's still pixelated then you have some other problem that I have no idea how to fix.
I'll let u judge if it's a bug by saying this; I did do a google image search, got a great looking Ferrari pic 1024 x 635 pixels. Saved and it was pixeled.