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Ok i've just tried a couple scenarios here...

I'm using WinXP, so the "temp" folder setup is a bit different. But i still do not get PS using the normal TEMP folder to store copies of these unsaved files. All i can manage to find in there is the normal PS swap file. I'm thinking that perhaps Win2K & XP operate differently in this situation, than Win98.

I don't think you mentioned which version of Windows you're using Carl? And how much RAM do you have? This may also be related to not having enough Ram to allow PS to create these temp files using it's allotted scratch disk space. That's just a stab in the dark.

I use AI too. But haven't used it for Web design really. Not for an entire page layout anywho. So i haven't noticed it's behaviour in this way. But i'm assuming it would act the same for me as PS does. Might very well be an OS thing.

I suggest you also post this question on the Adobe forum because their tech guys will help answer it. Just be sure to tell them the version of Windows you're using.