Sometimes Android can be a real pain. I don't think anyone would have noticed this, but when you set a wallpaper on your Android device it reduces the quality drastically. This is very clearly noticeable on my Galaxy Tab and it is kind of irritating, as the whole background is blurry.
After searching for hours on the internet regarding this issue, I found out that for some weird unknown reason the Android OS compresses the image when you apply it as a wallpaper. It does not matter if the original image is jpg or png. Another frustrating fact is that when you apply the pre-loaded static wallpaper, it applies it directly without any compression. Clearly any latest android device can handle a 100% uncompressed wallpaper without any lags. I am not a fan of live wallpapers, especially when they consume so much battery and processing.
The solution and workaround this issue is very simple. Use a third party application from the market to apply your wallpapers.
Go to the market and search for "Wallpaper Set and Save". I have tried this application on Android Froyo 2.2 and it works great. After opening the application you define the folder where you normally save your wallpapers. Select the wallpaper and click set. That is it, exit the app, and the wallpaper now on your Android device is applied uncompressed.
Check out the examples below for a comparison, to get a better idea of what I mean.
(Click the image for full size)
It is to be noted here that even when you set a wallpaper from the app, if the wallpaper is not of the correct resolution of your device, then the image will be blurry and compressed. You have to use the wallpapers designed specifically for your device. For example the Galaxy tab requires 1200x1024 resolution wallpapers and phones like Desire HD, Galaxy S require 960x800 resolution wallpapers. Kindly browse eSeth by selecting your Android device to download correct resolution wallpapers. eSeth has over 5000 wallpapers for Android devices with various resolutions.