I see jasypt uses salt and iteration count for creating digests. Does it also use them for generating keys for password-based encryption?
Of course. You see the use of salt and iteration count more thoroughly explained in jasypt documentation when referred to digests, but this is simply because many people wrongly (and dangerously) forget about using them when doing digests of, say, passwords. Thus, it seemed important to remark its use when digesting. On the contrary, password-based encryption is usually done the right way, partly because the Java API for PBE enforces it to some extent. Anyway, jasypt offers you the advantage of transparently dealing with secure salt generation and checking. For more info about the way password-based encryption should be done (and is done by jasypt), see see PKCS #5: Password-Based Cryptography Standard.