When and how to use internet image formats Is an article that breaks down what are the advantages and down sides of JPEG, PNG, and GIF when used on the internet.
To try and sum up:
* JPEG:
o Good:
+ Photographs
+ Game screenshots
+ Movie stills
+ Desktop backgrounds
o Bad:
+ Windows application screenshots
+ Line art and text
+ Anywhere where fine lines or sharp color contrast is needed
* PNG:
o Good:
+ Text, line art, comic-style drawings, general web graphics
+ Windows application screenshots
+ When absolutely 100% quality is required (24 bit)
+ When alpha channel support is required
+ As a general replacement for anything that is a non-animated GIF
o Bad:
+ Photos, in-game screenshots (only when quality is not important and you're looking for small files)
+ Disappointing browser support from Microsoft and others
* GIF:
o Good:
+ Where animations are absolutely required
+ Widespread browser support
o Bad:
+ Patented, legal techicalities
+ Large file sizes compared to PNG for the same quality
+ Obsolete