Python 2.x, 78 chars
a=input()
i=0
while a>=1e3:a/=1e3;i+=1
print"%g"%round(a,input())+" kMGTPE"[i]
This version (75 chars) uses printf which will print extra zeros and follows the round-to-even rule.
a=input()
i=0
while a>=1e3:a/=1e3;i+=1
print"%%.%df"%input()%a+" kMGTPE"[i]
