I'm glad it worked for you. Chris is definitely right that compression can seriously degrade a photo and we'll see it in banding, etc. Also, a photo with very subtle changes in tones, like a sky, may need more than 8 bit limitation of 256 steps/shades per color, so we see steps, banding or sometimes blotches in some areas. 16 bits gives us 65,536 shades of each color, and more is better in this case. Processing in 16 bit from start up to the finish helps avoid this, then convert to 8 bits for web use at the end. If you're printing, I suggest to stay with 16 bit TIF.
Here's an article from Photoshop Essentials that discusses this, the examples they have are not as pronounced as a sky, but the effects are the same.
http://www.photoshopessentials.com/essentials/16-bit/