The theory is that if the showee is in front of you, you flip the device toward him about its x-axis, so it is landscape but upside-down and back to you. The image will rotate to be the right way up for the showee. In order for this to work it has to assume one way is up. Personally, I think it's pretty groovy, but I agree an option to turn it off would be handy. Still, there are other apps one can use to show a jpeg; MicroB springs immediately to mind.

Actually, I have just dicovered something. Zooming an image (using the volume rocker keys, for them as don't know) seems to disable the autorotate behaviour, with the image remaining in whiche'er orientation 'twas in when you zoomed. Returning to the original zoom setting reinstates rotation.