Some people report that with an ISO setting of 200 or higher, there is graininess in the pictures, so check your ISO setting. I don't own one of these cameras, but there is a lot of discussion on the net about them. The following amazon discussion about the problem deals with a fellow who upgraded to the S3 from the S1. One problem was the ISO setting got bumped up, but another problem was the ISO was increased in the Sports Mode. See if any of this applies to your situations:
http://www.amazon.com/Grainy-noisy-pixelated-photos/forum/Fx36DLASC37633N/Tx2BFEA8BW518TA/1?_encoding=UTF8&asin=B000EMWBV0
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