Why does blur occurs in wide photos shot in olympus e - 500 digital cameras?

Blurring at the edges of a photo is some times a function of lens design. A recent report on the E-500 stated "One thing which stood out in some of our images was the way the E-500 dealt with the transition from an over-exposed area of the image to an edge or detail. It has a tendency to 'hard clip' the edge and leave it looking slightly jagged and consumer-digicam-like ..." I have given you a link if you would like to read the whole review.

There are other possibilities. Check the lens itself, both the front and back for finger smudges or dirt. That can cause light to cause blurring on the image. Another cause is good old fashion lens flare. This is caused when the the light (usually the sun)enters the lens from just off frame and causes an unusual streak across the image. When the light is at a more acute angle, it can cause softening of one edge of the image.