Nice job. I agree, the decals do look very fuzzy and low resolution. I also notice some of the decals are cutoff at the parting lines of the top view to side view, and back view to side view. I'm assuming you were just using the default skin from LFS and modifying that.
I have to ask what program you are using. Because, if you are using Paintshop Pro, PhotoShop, or Gimp (does Gimp open psd files?) then you can go to Master Skinnerz (link below) and download Bunta's very popular 2048x2048 pro skin templates with mask and wireframe layers to aid in skinning. They are excellent templates, but are very big. 2-4 mb to download the zip, but extracted they are 25 mb. The mask helps in determining the skinable area, wireframe will help in placement, and the size helps with quality. After the skin is completed, you have to resize it 50% to export to jpg and upload to LFSWorld. It is well worth all the effort of using these templates. You can also browse around Master Skinnerz and see everyone else's excellent skinning skills.
Here's a link to the Pro-kits:
http://www.lfs-gear.com/kitz.html
And Master Skinnerz main site/forum:
http://skinnerz.proboards26.com/index.cgi