DCR-SX40 picture quality

So...This is my girls new camera-the Sony SX40, and as you can see from the following photos, this picture quality sucks...Skin tones are pixelated, edges are blurred and pixelated as well... I have gone through all options and have found no options to improve it. Any advice? Thanks in advance ;]

http://i68.photobucket.com/albums/i7...k/DSC00034.jpg
http://i68.photobucket.com/albums/i7...k/DSC00052.jpg

Yeah, that's pretty awful.. I would suggest stick to still camera's for pictures and video camera's for video.. I doubt the video camera gives you a lot of control over still photo settings so you may not be able to get it to improve.