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Usually a GIF is used.
<add> *(#%&$(%^ flaky damn mouse!
Was going to say if you did save it as a jpg you would lose your transparent area (would file with some default color probably).
Photoshop is trying to save you from losing your hard work by making you save it in a format that will hold the properties you set. :)
When first starting out, I spent a week, figuring out I couldn’t have transparency in a jpg. Poking around other peoples sites, I noticed alot of .gif's used where transparency was used, saved my file as gif and been doing it ever since. Still I wonder why no transparency in jpg's.