I just tried an experiment. In the first picture, I applied a standard iPhone 5 resolution wallpaper (640x1136). In the second picture, I applied the same wallpaper, but with an iPad 4 resolution (2048x2048). The iPad wallpaper is noticeably clearer than the iPhone 5 resolution, due to the zoomed-in effect of Parallax. This means that standard iPhone 5 resolution wallpapers will not be of a sufficient resolution with Parallax turned on.
Edit: it seems I can only upload one picture per post from my phone. This is the iPhone 5 resolution wallpaper on my iPhone 5.