You can't with JPG's but can with GiF's. Easiest way is probably to 'export' (not save as...) RGB picture as GiF 89a - then select colour(s) you wish to be transparent.
With PS7, if you keep the background of your image transparent in Photoshop then "Save for Web" as a GIF the resulting image will have a transparent background.
png files are great, but I have seen problems with them in some web browsers.
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