Transcoding images is why all old pictures on the web a a blocky mess of unholy JPEG.

There are ways to transcode images in such a way that if they're downloaded and reuploaded to your service you don't lose any further quality in your re-upload.

As someone who shared a good deal of Spore creations over the internet, I disagree.

(The game would generate a "card" with a visual preview, but would stuff the XML encoding of the creation into some PNG metadata field so the image could be dragged onto someone else's game.)