Difference between .jpeg, .gif and .png image formats

JPEG (Joint Photographic Experts Group)
JPEG is a standardised image compression mechanism. JPEG is designed for compressing either full-colour (24 bit) or grey-scale digital images of "natural" (real-world) scenes.
It works well on photographs, naturalistic artwork, and similar material; not so well on lettering, simple cartoons, or black-and-white line drawings (files come out very large). JPEG handles only still images, but there is a related standard called MPEG for motion pictures.
JPEG is "lossy", meaning that the image you get out of decompression isn't quite identical to what you originally put in. The algorithm achieves much of its compression by exploiting known limitation of the human eye, notably the fact that small colour details aren't perceived as well as small details of light-and-dark. Thus, JPEG is intended for compressing images that will be looked at by humans.
A lot of people are scared off by the term "lossy compression". But when it comes to representing real-world scenes, no digital image format can retain all the information that impinges on your eyeball. By comparison with the real-world scene, JPEG loses far less information than GIF.
A useful property of JPEG is that the degree of lossiness can be varied by adjusting compression parameters. This means that the image maker can trade off file size against output image quality.

GIF (Graphics Interchange Format) 
The Graphics Interchange Format was developed in 1987 at the request of CompuServe, who needed a platform independent image format that was suitable for transfer across slow connections. It is a compressed (lossless) format (it uses the LZW compression) and compresses at a ratio of between 3:1 and 5:1
It is an 8 bit format which means the maximum number of colours supported by the format is 256.
There are two GIF standards, 87a and 89a (developed in 1987 and 1989 respectively). The 89a standard has additional features such as improved interlacing, the ability to define one colour to be transparent and the ability to store multiple images in one file to create a basic form of animation.
Both Mosaic and Netscape will display 87a and 89a GIFs, but while both support transparency and interlacing, only Netscape supports animated GIFs.

PNG (Portable Network Graphics format) 
In January 1995 Unisys, the company CompuServe contracted to create the GIF format, announced that they would be enforcing the patent on the LZW compression technique the GIF format uses. This means that commercial developers that include the GIF encoding or decoding algorithms have to pay a license fee to CompuServe. This does not concern users of GIFs or non-commercial developers.
However, a number of people banded together and created a completely patent-free graphics format called PNG (pronounced "ping"), the Portable Network Graphics format. PNG is superior to GIF in that it has better compression and supports millions of colours. PNG files end in a .png suffix.
PNG is supported in Netscape 4.03 .
When should we use JPEG, and when should I stick with GIF?
JPEG is not going to displace GIF entirely. For some types of images, GIF is superior in image quality, file size, or both
Generally speaking, JPEG is superior to GIF for storing full-colour or grey-scale images of "realistic" scenes; that means scanned photographs and similar material. Any continuous variation in colour, such as occurs in highlighted or shaded areas, will be represented more faithfully and in less space by JPEG than by GIF.
GIF does significantly better on images with only a few distinct colours, such as line drawings and simple cartoons. Not only is GIF lossless for such images, but it often compresses them more than JPEG can. For example, large areas of pixels that are all exactly the same colour are compressed very efficiently indeed by GIF. JPEG can't squeeze such data as much as GIF does without introducing visible defects. (One implication of this is that large single-colour borders are quite cheap in GIF files, while they are best avoided in JPEG files.)
Computer-drawn images (ray-traced scenes, for instance) usually fall between photographs and cartoons in terms of complexity. The more complex and subtly rendered the image, the more likely that JPEG will do well on it. The same goes for semi-realistic artwork (fantasy drawings and such).
JPEG has a hard time with very sharp edges: a row of pure-black pixels adjacent to a row of pure-white pixels, for example. Sharp edges tend to come out blurred unless you use a very high quality setting. Edges this sharp are rare in scanned photographs, but are fairly common in GIF files: borders, overlaid text, etc. The blurriness is particularly objectionable with text that's only a few pixels high. If you have a GIF with a lot of small-size overlaid text, don't JPEG it.
Plain black-and-white (two level) images should never be converted to JPEG; they violate all of the conditions given above. You need at least about 16 grey levels before JPEG is useful for grey-scale images. It should also be noted that GIF is lossless for grey-scale images of up to 256 levels, while JPEG is not.



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