I have a .Net application written in C# where members may upload their photos and have them displayed on our website. We are trying to
maintain the best quality using best settings in .Net for this.

A good commercial comparison is as follows;
I uploaded a photo to www.flickr.com. http://www.flickr.com/photos/visionefx/446635882/in/photostream/
The photo contains 73076 kbs. --- When I upload the 'same photo' to our application it saves it at 13076 kbs. That's nice for speed but not very good for quality.

Here is the settings we are using:
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System.Drawing.

Image image1 = System.Drawing.Image.FromFile(Server.MapPath(imgfilepath + actimgFilename));
System.Drawing.

Image smallimage = new Bitmap (imgNewWidth, imgNewHeight, image1.PixelFormat);

Graphics oGraphic = Graphics.FromImage(smallimage);
oGraphic.CompositingQuality =

CompositingQuality.HighQuality;
oGraphic.SmoothingMode =

SmoothingMode.HighQuality;
oGraphic.InterpolationMode =

InterpolationMode.HighQualityBicubic;
oGraphic.PixelOffsetMode =

PixelOffsetMode.HighQuality;

Rectangle oRectange = new Rectangle (0, 0, imgNewWidth, imgNewHeight);
oGraphic.DrawImage(image1, oRectange);

smallimage.Save(Server.MapPath(imgfilepath + newFilename), System.Drawing.Imaging.

ImageFormat.Jpeg);
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Thanks in advance,
Rick

It sounds like the problem might be with the level of compression being used when you save as JPEG. If so, I believe you might find the following sample on MSDN helpful:

http://msdn2.microsoft.com/en-us/library/system.drawing.imaging.encoder.quality.aspx

You could also try saving the file using a lossless format such as TIFF.