Hmmnnn. Blame it on bill gates. Micro$oft jpegs do not stricltly adhere to the JPEG standard, whilst most things can deal with it, some things can\'t. One of the things that can\'t is PHP (the language wot the board is written in).
As with many things from M$, they work fine in a wholly M$ environment, but elsewhere may struggle.
I come across hundreds of these little annoyances, the M$ response is usually, do it in ASP instead (an M$ product) or use microsoft SQL server (an M$product) instead, use a server has support frontpage extension (ooh let me guess, I bet that would be a microsoft one) etc etc etc
Frightening to think that the vast majority of systems that run your lives are wholly reliant on M$ somewhere along the line