Yep,..
Also updated to iOS 8.1 here.
Partially happy because it is 'Better' than any iOS 8 version 'yet'
--But I'm with Mr-duong567 in saying it isn't fixed. (you have to take a 2nd closer look, in oder to see it, because at first glance it seems to be fixed)
--Just take these steps-- and see..
Opening the same pictures (picture for Picture) inside the 'Pictures' and the 'Wallpaper-settings' and scale them up at the same zoomed-in size in both places, --You'll see that the one inside the wallpaper setting still seems a-bit blurry... Not overly bad, (more like PNG-like blurry style)
But sadly not pixel-perfect sharp.. (No need for sample placing as Mr-duong567 already profided😉
So with iOS 8.1 it is not 'completely' fixed.😟
ALSO: I did notice that choosing any picture inside the wallpaper-settings is rather slow?
--And did anyone else notice, whilst the "Camera-roll" folder has returned (replacing 'Recently Added')
If you go inside the 'Wallpaper-settings' folder menu, the "Recently Added folder is still present there, alongside the camera-roll???😕
---A bit 'messy' from apple i think.