Snapshot Issues / Resize PS CS4 Pixelation

This may seem like a dumb question, but it's driving me crazy.
Before I upgraded to CS4, I never had an issue when I resized snapshots I took in Second Life. Since upgrading though, every time I use the free transform tool to make the cutouts from the snapshots smaller, I get TERRIBLE pixelation. It has prevented me from releasing some things simply because the ad would make it look so bad, I don't think anyone would buy it.

Has anyone else had this issue? As I stated before, with previous versions of photoshop, I never had this issue. I'm assuming it's a photoshop issue and not one with Second Life since I have the exact same settings I used to use for snapshots. My graphics settings in Second Life are on high, I take high res snapshots, and I save them at a large image size. This has always been how I've done it in the past. I see looking through the forums that high res snapshot may not be working anymore, but I still don't think that is what is causing my pixelation problem. The snapshots look crisp and clean before resizing, so again, I am led to believe that the problem is coming from Photoshop during resize.

If anyone has any information or if you can help me, I'd be ecstatic to hear it.

There are several different methods of resampling to choose from. Changes are you were using a different one in previous versions of Photoshop than you're using now. In Preferences, on the General tab, you'll see a pulldown menu for Image Interpolation options. Experiment with each to see what effects they have. Note, the same choices also appear whenever you resize an image (Image -> Image Size, or ctrl-alt-I).

Oh perfect, thanks. I was about to rip my hair out.