Yep, same problem here. I had the same problem on my iPod touch 16GB and my first iPhone 8GB and now it's happening on my new iPhone 16GB. Jailbreaking does not seem to have any effect on the problem as I was experiencing this problem on my new iPhone before i Jailbroke it, and now that it's Jailbroken the problem is still there. I've checked numerous other forums and still have no answer to this problem. It was nice to see however that I am not alone as many others are having the same problem. Sure would be nice for Apple to at least acknowledge that this is a problem and that they're working on a fix for it.
One thing to try.
Find one of the songs that does not have the correct album artwork showing on the iphone.
Right click or control click on that song and choose get info.
When the song information window opens, go to the artwork tab.
Click on the artwork and drag it to the desktop.
Now delete the artwork from the info window.
Once all the artwork is deleted, click the add button and choose the file that you just put on your desktop.
I visited a local Apple store who advised that I should not have the compilation box ticked on iTunes, I have tried this amongst other suggestions & they don't seem to work.
Oh well it's not as if I spend all the time listening to it watching the screen. Therefore it's just a petty annoyance.
Same thing happens for me as well. it is quite annoying. i've searched various forums, but no one seems to know the reason for this, and have found no permanent solution.
deleting and reloading (synching or manually drag-and-drop) will fix the problem temporarily, but as soon as i make another change, a different album will get mixed up.
it shows up correctly in iTunes, and also in the album flow part of the iPhone, but not in the portrait view.
i've had random video shots get assigned to some albums...
only thing i've noticed is that it only started happening when i make changes to songs that are in a play list.
i noticed an album got messed up, so i removed the problem album from the ipod, and removed the songs (of that album) that i had in a playlist, and another album where i had songs in the same playlist got affected.
not sure if there's correlation to playlist editing and this album artwork problem, but it seems there may be.