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Installing an Xbox 360 game on the console's hard drive tends to improve its performance. However, in the case of Elder Scrolls V: Skyrim, the installation is causing graphics issues for some users.
"Skyrim uses a lot of dynamic streaming systems, including textures. We’ve seen a few reports of certain textures temporarily scaling down on the Xbox 360, and not scaling back up," reads a post on the Bethesda forums from a community manager (via Shacknews). "We have verified that this issue does not occur when playing off the disk and when the game is fully cached (not installed). Skyrim makes heavy use of the Xbox 360 caching system, and caches over the normal course of play while in menus or interiors. This cache can be wiped when other games are played or when the user manually removes it."
Bethesda is currently working on a fix for the issue. It will be included in the next title update. No time table was provided for its release. Might want to hold off on install until then.
Skyrim launched on November 11th worldwide on the PS3, Xbox 360 and PC.