HemiMG

coders;379892 said:

First red flag - they demand 30% upfront to start the project. Don't ever pay for something without seeing something that you are happy with. Money will be lost!
Second red flag - they demand another 20% when graphics are made
* They outsource an image maker (you can do this)
- you've lost 50% of you project's value - and no programming has been done.
Third red flag - another 30% on beta release
* They outsource to very inexpensive developers on elance and ODesk - I've seen their profiles and they charge between $5-$15/hour (you could have done this too, but you didn't) *You lost 80% of your project's value now

I don't know anything about Jiffy Software, but I couldn't disagree with you more on these points. Deposits are extremely common with outsourced work. As are payment milestones. Anyone expecting to have all of the work done before they pay a dime sends up far more red flags than someone who requires a deposit and milestone payments.
And why does it matter if they outsource an image designer? If you pay for the graphics, and you get the graphics, why does it matter who made the graphics?

I do my own graphics, which isn't really ideal because I'm not that great at it, aside from 3d graphics which I'm fairly decent at. I did the asteroids for Landing Party using...I don't remember which 3d program now. I also did the spaceship, which I don't think looks bad. I believe it was modeled in Electric Image Modeler, which is long since out of production. I did the people using Poser, they don't look bad, but they are too small to really look good. Custom graphics can get pretty expensive quick and I haven't grown comfortable enough with sales to not fear losing money that I don't really have, so I haven't hired any out yet. I'm hoping the release of CatHide will help fund more professional graphics, because I do think that they are essential to good games, and critical to the types of games that I want to be creating.

As for websites, there is opengameart.org, which has a bunch of free graphics. You can search the jobs sections here, and at Toucharcade and find some graphics artists, they won't be free, but you said you don't mind paying so its worth getting a quote. I recently bookmarked a graphics designer's site at shadow-embryo.com, his work looks amazing. I don't know what he charges.

You can also search the questions over at gamedev.stackexchange.com for sprites and graphics. Many people have asked over there about good places to get graphics, so a search of the questions should bring up some decent answers.

Before I found Shadow Embryo's site, I had a few graphics designers bookmarked on Elance, you can generally get work done pretty cheap there. But with sites like that you need to be extra careful that the designer isn't just ripping someone else off and selling works that don't belong to them. The prices people are willing to pay on that site have went down so much over the years that good provider and good buyers have a harder time finding each other.