It's always been looked at that using width/height attributes on images which aren't what the original image actual is is a bad idea. It could mean pixalated images or download sizes bigger than nessary.
But, is this still an issue? I wouldn't suggest up-sizing photos, but downsizing shouldn't be an issue provided that its not too much of a difference from the original and keeping to scale.
For example, I have a photo that is 600x400 and I stick a width of 400px on it. Most modern browser scale the image down and it looks like rendering is still decent.
So, what is everyones view on this?