Lionelm has a good point. It is usually better to add text AFTER you resize your image to DPC standards. Using text BEFORE you resize means that you're distorting the text to be smaller. Also, it may be that the font you chose just doesn't work well on the web, so try different fonts to find out.
Steve,
I just finished my "postcard" submission (nothing like a little procrastination!).
I did not have trouble saving from PS, and I did not flatten prior to saving. I reccomend adding the text at full resolution, always better to have a smoother edge to work with prior to downsampling.
Make sure your font is not too small, you don't have alot of pixels to work with. I started with 24 point at my original vertical resolution of about 1500px, so at 480px vertically (final size) I'd have to be at about 8 point.
