You can achieve slightly better results when scaling if you do it iteratively, instead of scaling down to 50% try scaling down to 95% 13 or 14 times. This won't work miracles because, as Richard said, every time you scale down you're throwing away information.
Darby Edelen Designer Left Coast Digital Santa Cruz, CA
First of all, I believe the reason why your picture is falling apart, when you downscale is the fact that you are using the JPG format. JPG is probably the worst format in the world ( sometimes I like to exaggerate), because every time you open it, do something to it, then save it, it averages the colours it contains. That means it chooses similar colours and reduces it to one average colour.
So you are loosing colours every time you save. That's also known as posterisation.
Also I don't agree 100% that when you downscale you loose all the pixel information.
The correct way in my opinion is in PS in the image size dialog, to uncheck the RESAMPLE IMAGE button, but make sure the KEEP PRPORTIONS button is checked.
This way when you downscale, you don't loose pixel info because if you go down in size, the resolution will go up, so it's still contained in the picture.
If you downscale withe the RESAMPLE BUTTON checked, you will loose information, because the image resolution stays but the picture get's smaller. Does that makes sense?
A good idea when downscaling is to at the very end apply some unsharp masking ( depending on the reduction factor I would start with something like: 150, 1-1.3 pixel.
The most important although is that you first, right after opening the document, save it as an PS or TIFF or such, but not JPG.
Give it a shot, I bet you will be surprised about the differnt result.