When an avatar looks "pixelated," that's generally because of a texture that's either of a low quality or size, or because the texture hasn't loaded yet.
When it comes to shapes, there are "prims" and "sculpts." Prims are all basic shapes like cubes, cylinders, and spheres, which can be put together, resized and reshaped, but not very well; there's only so much you can do with them. Sculpts are made in an external program like Blender or zBrush, and generally look much, much smoother and higher-quality, especially when combined with good textures.
Also, if you're talking about how some avatars seem to become flat and blurry at distances, those are "avatar impostors", which are Second Life's way of taking some work off your graphics card when people aren't close enough to require full detail; that can be turned off in Graphics under Preferences.