I tar a directory full of JPEG images:
tar cvfz myarchive.tar.gz mydirectory
When I untar the archive:
tar xvfz myarchive.tar
May be you have ftped the file in ascii mode instead of binary mode ? If not, this might help.
$ gunzip myarchive.tar.gz
And then untar the resulting tar file using
$ tar xvf myarchive.tar
Hope this helps.