So as I said, I'd try to make a vector image of this of so you can have a decent image on your phone (that and I really like this picture - it's cute). I haven't finished yet but this what I have so far...
The shading is really tough... I'll upload when I'm finished so all of you can glance away.
I've been playing around with a lot of different backgrounds to see which look best. So far it's pretty clear that solid vector images work the best, but some other slightly more complex images like ones with a "painted" look and 16bit graphics seem to work fairly well to.
The original images I used can be found here: http://sdrv.ms/19wRLR3 (there are also some other images in there that I don't think work well, but others are free to try)
Most all of them are using full color with the number 2 setting to make them darker/richer. There are a very few that use the number 1 unmodified setting, like the Bioshock Infinite Burial at Sea image, and others that I have examples both settings 1 and 2.
For the most part it's up to personal preference, but setting 2 does help overcome the washed out effect that happens because of low brightness/limited detail used (at least on OLED). Often the number 2 setting might look too dark/saturated inside the app but actually equalizes out well in actual glance mode.
P.S. I do have to say, given how bad I've seen burn in with OLED screens... I'm actually somewhat terrified to leave my glance screen on all the time with these backgrounds. Even with it rotating through 4 images and at a fairly low brightness... as neat as that is.. it's not worth having those images burnt in and ghosting over everything I do a few months from now.
I have some very beautiful Diablo 3 paintings done of each of the classes/characters; unfortunately most of them don't come out well because they are too detailed.
And finally, the obligatory "Fake Young Joe Belfiore" photo, a must for the die hard fans.