A quick Google search yeilded this in the number one position for "jpeg vs jpg" JPEG/JPG Short for Joint Photographic Experts Group, the original name of the committee that wrote the standard. JPG is one of the image file formats supported on the Web. JPG is a lossy compression technique that is designed to compress color and grayscale continuous-tone images. The information that is discarded in the compression is information that the human eye cannot detect. JPG images support 16 million colors and are best suited for photographs and complex graphics. The user typically has to compromise on either the quality of the image or the size of the file. JPG does not work well on line drawings, lettering or simple graphics because there is not a lot of the image that can be thrown out in the lossy process, so the image loses clarity and sharpness. here's some more info http://en.wikipedia.org/wiki/JPG
jpg comes from when file names had to conform to the 8.3 standard. Now, you don't have to worry about that, so most people use the full acronym, but either one works.
Of course you can't attach an image in vB if it is jpeg, only jpg That causes issues for me consistently here and is why I usually just end up hotlinking.
yfs1, it's a setting in vbulletin. jpegs are allowed. Shawn just has to enable them in the admin panel and give them proper size/dimension permissions.