In the Lite version: you can create only 3 layers and can save only JPG with watermarks. With other words - you can't actually save your work. Lite version created for testing Paintstorm before buying it. In the full version, you can save your work as layered PSD (photoshop format) and also PNG and JPG.
The thumbnail preview realized in Itunes save. Also, in camera roll, you can save only as JPG.