In the early days of the Internet, there was a heavy emphasis on text because Internet access speeds were much slower than are today. Poorer quality graphics were tolerated because they loaded much more quickly over dial-up connections.
The all-pervading nature of broadband connectivity has changed perceptions however. With Internet connection speeds increasing, so too has the ability to access higher quality images. As a result web users are much less forgiving when it comes to low-quality artwork.
Instead businesses must now use the best quality product images they can to maintain the impression of professionalism. Poor pictures subtly suggest that other aspects of your business may also be of lower quality, including your customer service. Any such concerns will have customers clicking off to one of your competitors in no time.
Is there ever a justification for using lower quality images? Yes, but only in limited use circumstances. If your business deals with countries where broadband penetration rates are low (like many regions of Africa and South America), you will need a website that is optimised for dial-up connections. And this will necessarily include lower quality artwork.
In the main though, the better your images, the more attractive your site is to shoppers. If you do need to create a low-bandwidth friendly site, consider creating a completely different, localised version in addition to your existing one so that you can better serve all of your online customers.