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I've pubbed two illustrated kids books to Kindle which was tough but had the most luck using Word. Once I discovered saving the Word file as a filtered web page, it was easy. I don't know if the same is true for Mobipocket reader. You may want to try importing the jpgs into Word, hit "Save As" and choose "Web page, filtered." Then you zip your newly-created web file with the web files folder (highlight both and right click, then choose "send to"..."compressed 'zip' file." Kindle reads it great. However I have not tried to convert anything to Mobipocket yet.
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