From the 7650 FAQ:
"What features does the Nokia 7650 camera/display support?
12 bit color depth, 4096 colors (display) "
Should applications provide images in 24 bits or 12 bits?
In other words, will the phone automatically convert color depths?
Is there a way to provide 12 bit images to the phone?
If yes, in what formats?
Icons, graphic and other UI stuff is better to be put in 8 or 12 bit format.
When using Photoalbum photos in 24 bit format (jpeg, 24b bmp etc) are driven through IETD display enhancement.
If photos are included in sw the compilation has to be told what is
wanted to come out after compilation. It is better to use either readyly to 12bit processed pictures, these are shown without
gimmicks. 8bit pictures have to be processed to Nokia-palette(shown OK), unless they aren't they are still converted to Nokia-palette and the picture gets ruined.
24bit pictures are converted to 12bit and dithered by Symbian. It just takes time. 8bit pictures are also converted to 12bit through Nokia-palette.
M, Forum Nokia