Album Builder does not support PNG image files. The reason for this is because while PNG's are a common choice for storing line drawings and graphics at a small file size with few colors, PNG images, like GIFs, are not well suited to photographs.
It's not economical to encode images in a lossless format such as PNG, when the loss of quality using JPEG is barely perceptible to the human eye and takes up a fraction of the space. We export to JPEG because it's primarily suited for photographs and they are accepted by all of our labs. Big album designs can become quite large and JPEG's are a great compromise between keeping files manageable for uploading and maintaining quality.