Based on my understanding at the moment, I'd speculate that the TIFF file format (GeoTIFF to be precise) was selected because (according to
http://www.remotesensing.org/geotiff/fa ... F%20Format?) the "GeoTIFF format is completely open, public domain, non-proprietary" raster file format.
Further, it is my understanding that the GeoTIFF file format allows each pixel in the file to be assigned a "Z" value (thereby allowing the draping effect when assigned to a surface model). I don't believe the JPG file format allows for this.
I've been experimenting with the "geotifcp" utility (
http://www.remotesensing.org/geotiff/geotiff.html) to convert TIFF images into GeoTIFF images and have been getting decent results. Life would be easier if you can get GeoTIFF images directly but if you can't, image files can be converted and subsequently used for draping onto a surface.