I've done a few photoshoped (as aposed to paintshop pro) pics.
And they look pretty good for jpegs.
have a look at this one, only 65 kb or thereabouts.
http://www.f1-jimages.co.uk/sept04_tha_0511_montagny.jpg
Havent done any automated watermarking. Still finding it a bit longwinded. So I manually put the copyright label on it.