The JPG (sometimes called JPEG) file format, short for Joint Photographic Experts Group, is an image compression type designed to work best with photographic work and high resolution. GIF's are more designed for web work or where depth of colour isn't an issue, they reduce the number of colors in an image to 256 from thousands, as a result of this they tend to be smaller in size than JPG's. GIF's are capable of transparency and animation where JPG's aren't. PNG's on the other hand are superior to GIF in that it has better compression and supports millions of colours, PNG also supports transparency. I'd be inclined to stick with gif's personally, they're smaller in size and load quicker.
"The more connected we get the more alone we become" - Kyle Broflovski
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