Just an FYI, PhotoShop ABSOLUTELY will be able to save JPG files.
Just a note to you though... You can select the Image Quality level in PhotoShop and so you pretty much have the power to decide what file size you end up with when you are done. The higher the Image Quality, the bigger the file-size, but realize that Auctiva will re-size the files when they get here so they will all end up a common size anyway.
The point is...you really cannot go too high on the Image Quality because Auctiva will re-size them. However, you can go too low. If you set the Image Quality too low you could actually end up with pictures that look worse than GIF's.
I think I save most of my pics at 80% and then let Auctiva do the rest. They end up looking very good even when Supersized. I have a 5MP camera that I use as well and I take all of my pics at the full 5MP...
Hope that helps...
Mike