http://live.pirillo.com/ – What’s better: PNG and JPG? The truth is that these formats actually serve two difference purposes. JPG caters to the photographic market, whereas PNG is generally considered to be a replacement for the patent-encumbered GIF format.

According to Webopedia, JPEG is:

Short for Joint Photographic Experts Group, the original name of the committee that wrote the standard. JPG is one of the image file formats supported on the Web. JPG is a lossy compression technique that is designed to compress color and grayscale continuous-tone images. The information that is discarded in the compression is information that the human eye cannot detect. JPG images support 16 million colors and are best suited for photographs and complex graphics.

And PNG:

Short for Portable Network Graphics, the third graphics standard supported by the Web. PNG was developed as a patent-free answer to the GIF format but is also an improvement on the GIF technique. An image in a lossless PNG file can be more compressed than a GIF file of the same image. PNG builds on the idea of transparency in GIF images and allows the control of the degree of transparency, known as opacity. Saving, restoring and re-saving a PNG image will not degrade its quality. PNG does not support animation like GIF does.