I faced this problem sometime back which got me wild. I searched a lot of site and asked for peoples help but many came up with foolish answers. But found solution after going through a lot and lot of forums. This problem occurs due to a Malware called MediaControl.exe which affects all the media files in your computer and changes the extensions to .jpeg , however it does not affect the format though.
Now, what this malware does is that- it creates a folder "mcont" in the System32 folder in the C drive. This is just a patch-like-virus and so most of the anti-virus does not detect this. It also creates autorun in the folder, thus making itto run the malware at the startup.
How to remove this Malware??
Firstly, you have to stop this process from running in your system. For this, Press CTRL + ALT + DELETE which will open the Windows task manager. Now go to process tab and find for MediaControl.exe and End the process.
Now, Go to Start->Run and type "msconfig". This will open the System congif Utility. Search for Mediacontrol in the startup tab and stop it from running in the startup.
Next,Restart the sytem and boot in Safemode. Booting in safemode will start the system with only necessary device drivers which in turn will help in detecting troubleshooting better.
Go to C:\WINDOWS\system32 and search for "mcount" folder. Delete this folder permanantly and restart the pc in normal mode. The malware is now removed from your system but the files which are renamed to ".jpg" still remain the same. You can use any tag editor or auto renamer to rename mulitple files. Hope this solves your problem.