Web Page Display Mystery (Graphics different on local vs web)

Hopefully somebody can help solve this mystery...locally my graphics on my web page display fine BUT as soon as I upload to my web server and look at the page online, the graphics appear kind of distorted, fuzzy and grungy looking (like really low quality jpegs). To see please scroll down - www.3sixtydesigns.com/temp/Bad_Display.html

I am getting this display across all Platforms (Mac and PC) as well as browsers (Firefox, IE, Opera, Safari). Also have tried on the iPod Touch (Safari) and my smartphone (Opera mobile) all show the distorted graphics and I just cant figure out why. Of course Support have found nothing wrong and have sent me screen shots proving it although they are unable to explain why I see what I see across all these different mediums.

I hoping someone can shed some light and solve this mystery, I have never run into this before.

PS I was about to leave my host and quickly decided to try the files on another host/server but the files displayed the same for me there too, so I figured its not my host. Have uploaded, deleted, reuploaded but just cant figure it out.

THANKS.