This is true. I've noticed that over time some of my higher DPI or generally bigger sized pictures get incredibly blurry. I've had to reupload them, and it was a pain =/
I haven't had it affect me for a couple of years now, it may have been a one-off server glitch or something. That doesn't make it any less of a problem, because albums are used to store the only copies of a picture. If that gets corrupted, you have no backups to replace it.