Problem with album artwork on iPhone 4

[phsl]

All of the sudden, the artwork on my iPhone 4 is oversized. It appears pixelated and behind the time and "slide to unlock" bar whenever I wake up the phone. I run iTunes 10 on a PC. I went to the "Get Info" window, and clicked on the artwork tab. The sizing bar is showing every song's piece of artwork at the highest size. It has basically 5 notched size opens. I moved to the one below, assuming it's standard for an iPhone, and pressed OK. I did this for every song, which took about an hour and a half. I then synced my iPhone, and it was still the same. I went back to iTunes and looked at the "Get Info" window again and went to the album artwork tab. Everything was at the highest size. I found that no matter how many times I changed it and pressed OK, it will revert to the highest size. It looks just fine on my desktop, but on my iPhone it's unnaturally large. I've had it since August and it's worked just fine. Last night I ripped some CD's, I used the "Get Info" to insert album artwork, synced my iPhone and noticed the problem. Please help I'm one of those people who needs to look at artwork...