Why are low resolution and re-sampled or scaled images common template mistakes?

Re-sampling: Let's say you are working in Adobe Photoshop and you have a 72ppi image. If you re-sample that image by replacing "72" with "300" in the Photoshop's Image Size window, you would just re-sampling neighboring pixels to add more pixels per inch. It gives a slightly softer result, though does not drastically improve the appearance. The result will be generally blurry and pixelated depending on the degree of re-sampling.

Scaling: You've started with an image that is 300ppi at 2 inches square and made the image bigger in your layout to fill the CD cover. Although the image was in fact 300ppi, when you enlarge it the resolution decreases. So, your image that was 300ppi at 2 inches is only going to be about 120ppi when scaled up to 4.75 inches. This can result in more jagged appearance depending on how large you scale the image.

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