I really have no idea why they require them, they normally ask for Quark or Illustrator files but since I don't do my photo layouts in Illustrator its not a format I provide them with.
I'm talking more for printing posters, calendars, brochures, business cards etc.
I have had that issue as well. Printers of pro brochures, calendars, etc. feel that Quark and other pro layout tools give them much better control than any photo manipulation tool such as PhotoShop. I plan to pick up a copy of Quark at my earliest convenience - but that would be for graphic design after I finish with the photos in PhotoShop.
Search me - I just bungle along!
I'd use what ever the camera took the photo at, it is the best quality you will get, unless you do some touching up