Here's proof -- the first time I saw it happening was when this banner went up.
Original image 117.72K as originally uploaded (now on ImageShack):

Now it's 30.38K and looks like shit (Photobucket version).

When I saw the banner go to crap, I actually deleted the one in my PB account and uploaded it again. It would last for a couple hours, then bam! crappy image. Lather, rinse, repeat. What's really odd is that it never happened before that particular banner, but has been going on ever since and now every single banner of mine has been compressed there.
According to Photobucket's FAQ, for free accounts each image cannot exceed 1MB or 1024x768. Since the biggest banner I've ever done was around 300KB a few months ago before I started trying to keep them under 200K, there's no reason for Photobucket to be messing with the images. I was going to go Pro, but now they can go fuck themselves.