Of course, but in this case it's super obvious that they compress uploaded jpgs even further. Loss in quality is very noticeable. You can manipulate jpeg's losslessly (rotate) but you can not recompress it losslessly and make it 1/3 of the original size. I'm concerned that it will do the same with upgraded account.

Only in some cases when the image is really small it will not compress the image again. Heck, it compresses png's again to png's to save few KB's (that's fine, since it's lossless). What is more annoying that it does that to jpg's too and it ruins the quality.

Example (original: 324 096 bytes):
http://img98.imageshack.us/img98/3883/masseffect2011062100391.png (324 096 bytes)
http://i.imgur.com/8xMK5.png (308 068 bytes)

JPG example: original 1920x1080 picture was 907 717 bytes, when uploaded it's 375 226 bytes and obviouosly looks like poop now.