Double check the settings PSP is using for saving .jpg maybe?
Personally I use Gimp and have no problems (apart from being a lousy artist that is), even Paintdotnet does a good job and can open, edit and save in .dds format. Even better, both of those applications are free, granted Gimp does have a "quirky" interface and takes a little getting used to, but it can open, edit and save to PSD files too.
Might also be something to do with your screen resolution, but not likely in these days of advanced GPU's and tons of VRAM.