wen chu, the following method works for me.. dun ask me why
though.
first go to your display settings and selected your current
(existing) wallpaper again. You will find that the screen does not
blacked out momentarily when you re-select the wallpaper you are
using at the moment. After which, go display settings again and
this time round, select the wallpaper you wish to change to. and
tata... the new wallpaper is selected.
Hope that's useful. It works for MY 7250i though.
Don't know if your hp is more 'temperamental'. 
Acid, the photos taken using the 7250i are quite blurry. there's
really much better camera hps in the market now. maybe try the
ericsson one (cant remember model no.)