The image is noticeably grainy with the screen protector on my iPod. The graininess is due to the distance between the matte surface and the display. I still like it on the iPod, though, because it reduces finger prints and improves the touchscreen feel/responsiveness.
Also, I noticed that the matte film doesn't actually reduce the reflections as much as a matte LCD. The diffusion is about the same as either of my matte LCDs, but the brightness of the diffuse light is much brighter with the film, since the glass behind it is reflecting the same amount. As a result, glossy with a matte film is much worse than either glossy or true matte, in my opinion.