I have an object which has a default image applied. After a period of time I want the image to change to show degradation or some other effect.

Is there some way of change an existing objects image or do you make a copy of all the parameters but the image and change it that way?

Or as a complete alternative am I dealing with sprite sheets? The reason I think not is that I am not thinking of a animated sequence but based on certain certain time or event.

Your help would be appreciated

I'm doing that with sprite sheets.
Sprites don't have to be constantly animated.

e.g. 6 levels of degradation: just change the frame of the sprite from 1 thru 6 as it degrades.
Easy.

require "sprite"
tilesheet = sprite.newSpriteSheet("tiles.png", 40, 40)
tileset1 = sprite.newSpriteSet(tilesheet, 1,6 )
local thing = sprite.newSprite( tileset1 )

thing.currentFrame = 3; --or whatever

Sprite sheets is probably the best way to go : http://developer.anscamobile.com/reference/index/sprite

you can use movieclip also if you prefer not to create a spritesheet from your images.

1

local images= movieclip.newAnim{ "image1.png","image2.png"}