I have a friend who recently purchased this TV, and the out-of-the-box picture was absolutely horrible. I helped him tweak his settings and it's much better now, but I can't recall exactly what we changed other than foregoing the regular preset picture options (movie, sports, etc.) and using the "Advanced Manual" and tweaking individual controls... Sanyo does a poor job of providing the necessary documentation.

From the limited research I've done, I'm finding many owners are having trouble with a faulty video board, so if tweaking doesn't solve your problem it just may be you have a defective board.