Choice

Some people say that JPEG is always better than GIF.

To me, with these images, GIF gives as good quality as JPEG. Even for photos! For plain text or flat-colour drawings, GIF gives a better quality result. GIF is nearly always smaller than uncompressed JPEG. Compressed JPG wins on size (not quality) for these photographic images.

Conclusion

Don’t use JPEG for text! Use JPEG for photos.

Formats

GIF

Oldest. Only 256 colours. Transparency. Animation. Patent issues.

JPG

Lossy. No transparency. No animation. Designed for photos.

PNG

Latest. Alpha transparency. Lossless.

Examples

When you create a JPEG file you can specify an image-quality or compression-factor. A higher compression-factor leads to smaller JPEG files but with a poorer visual quality. In the images below, 100% means uncompressed, 75% means compressed for smaller size at the expense of poorer quality images.

Text on flat background

The JPEG versions have fuzzy letters and the smaller jpeg shows some unpleasant artifacts in the background. Overall the GIF image is better quality than JPEG, PNG is equally good and is a lot smaller than JPEG or GIF

Text on graduated background

This time the compressed JPEG wins on size. However there is still a muddiness in the background. The GIF and PNG give good sharp text. PNG wins on size and quality.