I just used Snip & Sketch for the first time ever, and it happily offered to
save in png format. So it seems that the
default is still PNG,
only that something has gone wrong on your computer.
I suggest to reinstall this Microsoft Store application using the following
PowerShell command:
Get-AppxPackage Microsoft.ScreenSketch | Foreach {Add-AppxPackage -DisableDevelopmentMode -Register "$($_.InstallLocation)\AppXManifest.xml"}
It seems like the above operation fixed the issue, but only for one use,
reverting to JPG on the second use. We must therefore do something more
drastic. Create a System Restore point before starting, just in case.
Remove Snip & Sketch from Windows by the following command:
Get-AppxPackage Microsoft.ScreenSketch | Remove-AppxPackage
The above command uninstalls it from the current user account only.
It might be preferable to uninstall it from all user accounts with the
following command:
Get-AppxPackage -allusers Microsoft.ScreenSketch | Remove-AppxPackage
Search the disk for folders or files that contain the string
"Microsoft.ScreenSketch" and delete them (very carefully).
Do not take ownership of any Windows folders.
One such folder is perhaps
C:\Users\USER\AppData\Local\Packages\Microsoft.ScreenSketch_8wekyb3d8bbwe.
Enter the Microsoft Store, search for Snip & Sketch and install it.