JPEG for Photographs
The JPEG (Joint Photographic Experts Group) format for still image files is actually a format called JFIF (JPEG File Interchange Format) developed by the JPEG people. It is common usage to call it "Jay-Peg," and people wouldn't understand you if you called it anything else.
The JPEG format uses a lossy compression method developed by the JPEG group. This format is not palette-based, and was designed for photographic images. It takes advantage of certain characteristics of the human eye and the way it perceives changes in color and brightness. There are grayscale and color versions of the JPEG format.
Given a choice between the GIF and JPEG formats, you will usually get best results if you use GIF for flat-color artwork, such as line drawings, cartoons, and other work with large areas of a few colors. Use JPEG for photographic artwork, and anything that has a lot of colors and doesn't require the colors to be more precise than the human eye can distinguish.