Typically the technology aboard any space craft is 5 years older or older when it's being sent because it needs to be hardened and tested against the harsh radiation of space. So we're talking imaging tech from at best 2001 on this thing.
So yes bandwidth is an issue but so is the imaging technology. They couldn't put an HD camera on this thing.
Actually, I'm sure they could have, but a larger camera would have required a larger telescope in front, not to mention the bandwidth issue. Elsewhere in this discussion it's mentioned that the flyby data will be stored in two mirrored 8 GB units and slowly streamed back home through November 2016 (we'll get some lossily compressed images earlier, although nothing until the fly-by is finished and the main radio antenna again points at earth).
So an 8.2 inch mirror, largest ever sent to the outer solar system, with a 1024x1024 bits CCD, which isn't bad at all, weighing in at 19.4 pounds and an average power of 5.8 watts (http://pluto.jhuapl.edu/Mission/Spacecraft/Payload.php)
So yes bandwidth is an issue but so is the imaging technology. They couldn't put an HD camera on this thing.