TNG seasons 1&2 were mastered to 1" analog videotape. It degrades over time like 15 year old VHS tapes.
see this thread for more details on TNG and DVD / remastering to HD details.
Wow. That's a shame. I can watch TOS episodes in crystal clear high definition, the colors are sharp and bold, the lines crisp and detailed, yet TNG which was some 21 years later, looks old and outdated in quality. I guess they didn't think too far ahead on that one.
TNG just never looked particularily good. I guess they didn't have DVD in mind when they were making it, seeing as they did all of the post-production on NTSC video. When you watch it on VHS, you don't really notice how bad the picture is, but DVD really brings it out.
Edit: Beaten to it
It's alright. I still care.