Hi SueyL
Nice looking GUI you have made.
I suggest that the best answer would be to have the buttons on the LHS instead. RHS will be an issue with some new phones having a software taskbar instead of a hardware taskbar - AI doesn't allow for that.
Very strange that the pictures are blurry on smaller devices, but much depends on their (device) resolution and the app's image format.
Tips:
1) Ideally, the images should be exactly the size required. If this does not work well across Phones, then make the image slightly larger than full size - AI will scale them down accordingly - but if you make them too large, AI and ot the device may not be able to cope and the app (possibly the device too) will crash.
2) Think about having a seperate tablet version of the app, with images to suit, so that images are not scaled up. Tablets generally have more memory and their processors more 'grunt'.
3) All images should be PNG format - scales far better than JPG.
4) All images should be zero compression = faster app startup.