This happens on my touch as well. I had it jailbroken but then it went crazy so I restored it and now it's unhacked and it still does blurry coverflow sometimes and safari crashes.
I have seen this issue, annoying after I have spent quite a while getting good quality artwork attached to most of my albums - memory management problem ?
Uh, no, it doesn't. My Touch does it as well and mine is not jailbroken and is used for nothing but playing audio. It's done it since the day I bought it (four months ago), and has continued to do so no matter what firmware I have. But oh well, hardware problems (home button, sleep button AND screen randomly being unresponsive) have caused me to contact Apple and get it exchanged soon for an iPod Classic...won't have to put up with it much longer.
BTW, mine usually does it if I select a cover and look at the songlist, or if I "flip" through the covers really fast.