Album art messed up on iPhone 4
This is a problem that's caused many people head aches, and also seems to occur on iPhone 3gs models.

For more detail on what fixes have been attempted, you can read this Apple discussions thread on this issue.

There was a discussion thread I read a few months ago (which I can't seem to find) where multiple people reported a success at fixing the issue by doing the following:


Unsync all music and playlists on the iPhone
Click on the Apply / Sync button in iTunes
Shutdown / reboot the iPhone
Connect to iTunes and once again do a (blank playlist) second sync with iTunes clicking on the Apply / Sync button.
Add back playlists and re-sync with iTunes.