I was observing the same issue since a recent update in precise (I have 
upgraded to quantal since then and the issue persisted).
Unsetting the ICC profile as suggested by Felix in comment #14 solved the issue.

Before unsetting the ICC profile, I took the test suggested in comment
#19 (opened the image in gimp, and verified that ticking "Try to use the
system monitor profile" resulted in the same washed out colours observed
in eog). So it’s definitely an issue with the profile, not eog itself.

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https://bugs.launchpad.net/bugs/938751

Title:
  jpeg images are washed out or colors are skewed

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