The photo I edited with 'auto enhance colour' mode to make the picture look more clear; Basically, on the N8, you can see "layering", which is especially obvious on the black colour blending to other colours, you can see layers, which is in pixels. Not really sure how to explain technically.
I tried viewing the same picture on the N900 and it looks normal unless I put the brightness to maximum, then I can see some layering, but still not as bad as my N8.
Anybody have N8 care to try to put the picture on your device and view it?
I search through the settings, there is no way to adjust the colours or contrast, or other display settings; only have light sensitivity, which is brightness I suppose?
On camera mode, I notice the brightness/contract is high so if I'm in a room, I will notice the quality on the display isn't good, but the image if display on PC looks normal. I adjust the contrast to lowest and the display much better. Hm....

Maybe you can do a full factory reset just to see if everything comes back to normal? Better back up!