Layers, Smart Object, or PSD?

Hello
I'm a casual user of CS3, and would like to do a large amount of editing of a JPG requiring many sessions and many saves.  How best should I do this?  Should I:
1) Create a layer for editing; save the file each time I quit and not worry about image degradation?
2) Create a smart object; is the smart object for this purpose?  A brief run-through on creating the smart object, and finally saving back as a JPG would help, thank you :-)
3) Merely save repeatedly in Photoshop format, PSD, and not worry about image degradation?
Thanks for your help!
Pete291

…would like to do a large amount of editing of a JPG
You don't 'edit' a jpeg. No one edits a JPG. You edit an image. When the image is open in Photoshop, it has no format as such.
JPG is a destructive, compressed format, PSD is not. When you save as PSD you lose no quality whatsoever. So if you have many saves, the last option is most probably the most sensible.

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