you have to make your photo's in the full screen mode so the resolution of 480*640 (or vice versa) is being used instead of the smaller resolutions of the thumbnail and standard mode. You'll see it will sharpen the photo in FScaller far more! I'm afraid this IS the limit or maybe you can shoot photo's on your digital camera with a very high resolution, decrease the size of the picture, upload it to your phone as .jpg file and add that one to your contact(s). Never done this myself but something tells me the result will be very good.
I'm using a PowerBook and when I use iSync to synchronize my contacts with the SX1 it ports the mini-portriats that mail.app uses into the phone. Hence, when I make a call there is a small image of the person I am calling. In the contacts section of the SX1, however, the image that I select does not override that small pic. So I'm wondering if anyone knows where those smaller pics are stored and how to overwrite them with something better quality? (the mac pics are 64X64 and look pretty bad)