EDIT: These settings are only ideal with TouchFLO3d disabled.
Use Gimp (free photoshop) to make perfect wallpapers. Start with a large, high res image. Use "scale image" to shrink and output to 96ppi. Then, use "canvas size" to 480 x 800 (crop as desired). Export as jpg or png. If you hate the way the "seam" looks when going into landscape, use Filters>Map>Make Seamless.
Sample
