I've used JPG's before w/out any problems, but you have to have a filter installed for that. If nothing else, a BMP will work.
The problem COULD be the stretch, zoom or clip properties. Those properties handle what access does w/ the image if it doesn't fit quite right on your form. If the image was set to zoom, I could see that your image might be blurry. Here's what Access help says about them:
Clip (Default): The picture is displayed in its actual size. If the picture is larger than the form or report, then the picture is clipped.
Stretch: The picture is stretched horizontally and vertically to fill the entire form, even if its original ratio of height to width is distorted.
Zoom: The picture is enlarged to the maximum extent possible while keeping its original ratio of height to width.
Hope that helps... let me know if not!
jamie