I uploaded my binary and created the screenshots. All the screenshots I did are 640x960 and I uploaded them as PNG. Thinking behind this was that I should hand it off to them in the best quality possible so that when they re-compress them into 320x480 JPG, it won't lose more quality than it needs to.
However, when I log in to iTunes Connect where my app is awaiting the approval, I see all my screenshots there are still available as 640x960 png files (I can see this if I right-click and save them to my desktop). I really hope they won't just publish these screens like that, as it would mean users visiting the page downloading 4MB just for the screenshots, which wouldn't be much fun on iPhone over 3G connection. I can of course replace them with lower quality JPGs, but I don't want to do that if they will compress them again during app publishing time.
Yes, these images will be compressed automatically in .jpg by Apple. This happens when they process your app for the App Store (Last step after validation).