Ideally, use vector graphic formats whenever possible (logos and clipart are usually good candidates for this). Programs like Illustrator or Freehand are good for producing this kind of artwork.
If you need to use raster formats (eg. photographs or screen grabs), then make sure the resolution is sufficently high. Taking images off websites, for example, probably won't yield good results.
Also look at Distiller's options. If you use JPEG compression, try different compression settings to get a balance between file size and image quality. If file size isn't an issue, try a 'lossless' compression algorithm, such as LZW, or turn off compression altogether. You may also be downsampling images too much, so try higher values, or turn it off.