I believe that PSDs imported into PS Touch simply are flattened; they are not converted to JPG. I think this was done to protect the integrity of the app. (The number of layers available in PS Touch are much more limited due to the hardware. It's like 16 I believe vs. the theoretical thousands or so layers in Photoshop.) You can, of course, do the reverse (save as PSD in PS Touch and have the integrity of the layers preserved in Photoshop).