This is what happens when I email an image that I synced via itunes, and I let the phone resize it for me. If I send the full file it's fine. Only when I choose any of the smaller sizes does it totally destroy an image. Its weird, images that I had in my photos before I upgraded to the latest itunes are fine. Only images that I've recently added since I got the newest itunes and the 4S does it destroy. I'm going to call tech support tomorrow, I was just curious if anyone else had this problem. Yes, I've upgraded to 5.0.1 on the phone.
Also, unrelated, has anyone noticed any sluggishness when viewing photos on the 4S vs the 4? It seems to have weird delays all the time, and when I slide to a new image, it takes a tad longer to show the full-res image. And also when I double-tap to zoom in all the way, it seems to take it's sweet time to load full-res there, as well.