PNG is the default file system, but you can use JPG/Bitmap/TGA. There's a free download to play around with but it comes with a watermark, but that's what I did a few years. Then I've come back to it because it's got better. Also the chap and the team who designs it listen to ways to improve.
For some web designs like gaming and stuff it would really come in handy. I'm going to do a one with super heroes and that type of thing which flame painter will become a great tool - or that's the theory LOL
http://nbdesigns.me.uk - responsive
http://brewstersartz.co.uk - responsive
http://nbphotography.me.uk - responsive