Many different types of graphic file formats exist, but three graphic file formats are generally used in web pages--GIF, JPEG, and PNG. Currently, GIF and JPEG file formats are the best supported and can be viewed by most browsers.
PNG files are best suited for almost any type of web graphic due to their flexibility and small file size; however, the display of PNG images is only partially supported in Microsoft Internet Explorer (4.0 and later browsers) and Netscape Navigator (4.04 and later browsers). So unless you are designing for a specific target audience using a browser that supports the PNG format, use GIFs or JPEGs for broader accessibility.
GIF (Graphic Interchange Format) files use a maximum of 256 colors, and are best for displaying noncontinuous-tone images or those with large areas of flat colors, such as navigation bars, buttons, icons, logos, or other images with uniform colors and tones.
JPEG (Joint Photographic Experts Group) file format is the superior format for photographic or continuous-tone images, because JPEG files can contain millions of colors. As the quality of a JPEG file increases, so does the file size and the file download time. You can often strike a good balance between the quality of the image and the file size by compressing a JPEG file.
PNG (Portable Network Group) file format is a patent-free replacement for GIFs that includes support for indexed-color, gray scale, and true-color images, and alpha channel support for transparency. PNG is the native file format of Macromedia Fireworks. PNG files retain all the original layer, vector, color, and effects information (such as drop shadows), and all elements are fully editable at all times. Files must have the .png file extension to be recognized as PNG files by Dreamweaver.