For those who are remotely interested I have just received a response from those very polite guys at Digital Workshop about this very problem. Their response to my question whether a patch was available for PSP was, as follows:
"Unfortuantely, there is not an available patch for Paintshop Pro 7 that will support this file format.
If you are trying to import images from your digital camera, you may try opening up the camera software via the 'Twain' device within Paintshop Pro.
While in Paintshop Pro, make sure that your camera is pluged in and switched on. Click on 'File'>'Import'>'Twain'>'Select Source'. Select your camera from the list and click on Ok.
Again, click on 'File'>'Import'>'Twain'>'Acquire'. This will start up your camera software, allowing you to import the images into Paintshop Pro.
One way is if it connects directly to your computer (e.g. through USB, FireWire, or a Serial cable). These use a Shell Interface. This means that they should add a new drive to your 'My Computer'. You would then be able to go through any Open dialog (e.g. inside Paint Shop Pro™ choose File > Open) and find your camera under the Open Location drop-down list at the top of the Open Dialog.
Hope this helps"
A bit long winded, I feel.
I have pleaded for DW to produce a patch!
Mark H