GIF (Graphics Interchange Format) files are displayed by all browsers, and nowadays, only a few browsers need a helper application to display JPEG (Joint Photographic Experts Group) images. GIF works with 8 bit color, that is, it can display 256 colors. JPEG offers 24 bit color, which means that it can work with millions of colors, and is mostly used for photographs. In general, your images should follow the following guidelines to be "web friendly":
See also Tips on Creating Graphics at UT Austin