How to Improve Photo Quality
Lighting is very important to improving your photo quality. How to Improve Your Cheapo Webcam's Picture Quality has some great tips. And check out the Joe's, from A1 Photo Booth, tutorial on lighting your photo booth.
Do not use a dark backdrop for your photo booth. Webcams are unable to auto-focus correctly against a dark backdrop. Use an off-white background instead.
Your webcam also affects the quality of the photos. Built-in or integrated webcams on most Windows laptops have very low-resolution, so they are not recommended. Use an high-quality USB webcam to improve image resolution. Go into Camera settings and configure it to 750 image height and 10 frames per second for best results.
It also helps to have a computer with a fast CPU. An Intel Core 2 Duo or better processor is recommended.