Does iTunes compress images that I sync to my iPhone? When I sync a folder with iTunes to download into my iPhone, do the images get resized or compressed in anyway?  Specifically I am trying to sync large images such as 5000px x 5000px at 72dpi. If iTunes does do this is there another way to get them added to my phone without compression?
iTunes does indeed compress large images when syncing to the first-party Photos app on an iPhone or an iPad. It calls this process "image optimization" and it even gets its own progress bar when you sync your device.

Currently, the solution is to use some other third party image vieweing app. GoodReader, for example, can handle high resolution images, and there are many others.