This issue with the synced photo size is a tricky one. The photos are indeed "optimized" by iTunes before being transferred to the iPhone, but they are not being optimized for file size. Rather, they are being optimized for display speed. Specifically, each photo, which is stored on your Mac as a nice compressed full resolution JPG file, is being converted to 640x480 pixel raw 555 (16 bit per pixel, 5 bits per channel) bitmap format. I believe this is so that the images in the Photos application can be displayed rapidly with virtually no delay when flicking your finger between images. However, anyone paying attention to the size of their photo database will be left scratching their head. Even though the images have been reduced to wallet size, they still take up about the same amount of storage space and in some cases a lot more. Now that iPhones are getting faster CPUs, I wouldn't be surprised if Apple abandons this odd formatting choice soon. It was left unchanged in iPhone OS 3. Hope this helps to explain it!
-Glen
