Most Web browsers can accommodate 2 types of Web images directly in the browser, and the third type (PNG) is gaining a lot more support. Note, there are other image formats that some browsers support, but these three types are the most common.
.gif
The GIF file is the CompuServe image format and is best used for images with flat colors. It offers the ability to "index" colors on your images to make sure that they contain only Web safe colors or a small palette of colors and (with flat colored images) make the images smaller.
.jpg
The JPG or JPEG file format is meant for photographic images. If an image has photographic qualities, ie. no expanses of flat color, it is well suited to being a jpg file. Photographs that are saved as JPG files will generally be smaller than the same file saved in a GIF format.
.png
The PNG or Portable Network Graphic is a graphic file format made for the Web. It has better compression, color, and transparency than GIF files. PNG files don't necessarily have to have the .png extension, but that's how you'll most often see them.
