I've searched for a while and couldn't find an answer, but, unless I use Live Wallpapers or the default HTC Wallpapers, I cannot set any pic as wallpaper. When I try, it asks me to resize and then says it set the wallpaper...but it doesn't. I'm using the Froyo .3 manual update. And using WidgetLocker, wallpaper that I choose is zoomed in so it looks all grainy. FYI, all custom wallpapers I use are from the wallpaper thread here and everything was fine before 2.2.