Hey Devge, I actually have an iPhone 4 now. What you are describing is the standard behaviour of an app which hasn't been designed to take advantage of the 960x640 resolution. The problem is that instead of being a crisp doubling of pixels like it is on the iPad, the results are smoothed a bit resulting in a bit of a "fuzzy" look.

Having almost now come to the end of a 2D game project with both 960x640 and 480x320 resolutions in mind from the beginning I can say that it is not that hard to achieve. But unfortunately taking an old project with lots of assets and texture atlases already created is no small task to up-res.