Look at the "Try Turnkey on Amazon..." banner at the top of the turnkeylinux.org home page and tell me the artifacts don't look like hammered ass. I'll stick to lossless for anything with textual elements, thanks.
http://www.turnkeylinux.org/files/images/icons/drupal.jpg?12...
Looks like an issue with the original file - it was probably created at a higher res and then down-sampled.