I have the same problem with my 4GB iphone, noticed it when watching a movie on a flight back. Definitely noticeable and almost unwatchable in some dark scenes.
Following the commercial success (and technical disappointment) of the original Wildfire -- which featured a miserly 528MHz CPU and QVGA display -- HTC has returned with the Wildfire S.
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I have the same problem with my 4GB iphone, noticed it when watching a movie on a flight back. Definitely noticeable and almost unwatchable in some dark scenes.