The distortion is usually caused by your graphic program, when it save your JPG image at less than 100% quality factor. JPGs can be saved at any quality factor between 0 and 100%. 80% is usually fine for most pictures, but small images with hard color contrasts, can be a problem. The higher the quality, the more space the image take up, but this shouldn't be a problem with small images.
I don't have Photo shop, but I did some tests with IrfanView. The only way I can create an image that looks like yours is by reducing the quality factor to between 60% and 80%. At 100%, the image uses almost twice the disk space (Blank Image = 2.87K, Annotated Image@100% = 4.52K), but the coloring is smooth and the text is crisp.
Once you have saved the image at a lower quality factor, you can't make it better. You will have to start out with the original blank button. Try creating some more buttons and work with the quality factor. Also check the resolution you are saving your images at. The original blank button is saves at 72 DPI, but your "dates.jpg" image is at 96 DPI. A higher DPI generally means a better, crisper, image. But at reduced quality, it only make the compression algorithm work harder, and can still give you a bad image.