Comment 4 for bug 1081702

First of all it actually is 12.10 wallpaper rotate on 180 degree. Seriously.
It is wrong in 12.10 as well and it is not due to grainy effect. Grainy effect actually supposed to hide color banding and it is not supposed to break image into small squares. That's actually happens when you over-compress image with grainy effect which is clearly bad idea. Grainy images doesn't compress well at all — grainy effect will be heavily damaged... like here.
Is there source image without compression?

It actually very pointless to compress it at all. Image will be unpacked in the memory anyway. Why not to use loseless PNG instead of JPEG?