I've got Photoshop 7.0 -- like I said, JPGs were awesome but they tended to both saturate the color and add a little graininess. Saving in PNG (which is what most iconmakers seem to lean toward) helps preserve both color and the general quality of a PSD.
It's hard to notice the difference at first, but try doing this: Start making an icon and save the PSD as a JPG, then save it as PNG. Put both files up against each other; the difference should be noticeably obvious. I didn't realize myself until I tried it out, but remember -- you can't see it if you just save a general JPG over as a PNG. Has to be done with the other method while it's still in the works.
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It's hard to notice the difference at first, but try doing this: Start making an icon and save the PSD as a JPG, then save it as PNG. Put both files up against each other; the difference should be noticeably obvious. I didn't realize myself until I tried it out, but remember -- you can't see it if you just save a general JPG over as a PNG. Has to be done with the other method while it's still in the works.
I hope that made sense. XD;