"Jaggies" with my new Pentax Optio 450. Camera Problem?

Just purchased a new Pentax Optio 450.

I took some random indoor flash point and shoot photos. Images taken in the 640 x 480 Pixel mode had "jaggies" specifically in any strong linear lines within the image. It was specifically prevalent when shooting the subject matter at an angle regardless of where the resolution was set (low, medium or high).

I continued to experiment and found that when I shot a linear same subject matter straight-on, the jaggies were minimal or not there. When I shot in a higher pixel dimension there was no problem either.

I wondered if the camera might be malfunctioning in the the 640 x 480 pixel setting or it was normal and I just needed to make certain adjustments for it.

Feedback would be very appreciated.