GIFs

I also agree PNG is good, as the file size is smaller, and it is actually the successor to the GIF file format, I also like the quality of the images as well, making it my preferred picture format. 

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transparencies (excpet in IE of course lol), no loss of quality (GIFs tend to do this on larger files), smaller file size as you said, and it's Open, meaning no patented algorithems are needed to create them.

 I really can't see a reason why SpreadFirefox uses GIFs. other than the fact that everyone else still uses them...

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Actually, I don't think there's any difference in image quality between an indexed GIF and an indexed PNG with the same palette.  Both use lossless compression, after all.

PNG has the advantage of being able to do 24-bit color as well as indexed color, while GIF is limited to indexed color with a maximum palette size of 256 colors.  (Well, mostly.  I read somewhere that you can use different palettes on different frames of an animation, and you can give frames zero delay, so that they'll appear simultaneously, so you could effectively build up a true-color image split across a number of frames.)

Of course, in most cases, a 24-bit PNG image is much larger than an 8-bit version of the same image, whether saved as PNG or GIF.

And there's just no comparison between binary transparency and alpha transparency!

On the subject of patents, most of them have already expired.  The last patent on LZW appears to expire in about four weeks.

I'd guess the reason behind using 8-bit images with no or binary transparency is due to compatibility with the target audience.  The main goal is to convert IE users, and that's all that current versions of IE will display correctly without somewhat complicated tricks.  Within those specs, though, it seems reasonable to pick PNG over GIF, since you have to go pretty far back (like Netscape 4) to find something that won't display 8-bit PNGs correctly, and with zillions of people linking to the same images, saving a few bytes per image can really add up.

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* PNG compressed better than GIF in the greater majority of instances.

* GIF is NOT a loss less format. especially with larger images.

* IE does not fully support PNG, but Firefox does, so why not exploit it?!

JPG makes lots of noise when I try saving it on MS Paint. Ever since I figured this out, I've used PNG.

Where do you get that information? 

GIF uses LZW compression, which is lossless.  The act of saving an image as a GIF does not lose data.  (By contrast, saving an image as a JPEG does.)

The only thing that you "lose" is not lost by saving an image as a GIF, but by converting it to an indexed palette.  This happens with any indexed image, though, whether it's GIF, PCX, TIFF, or even PNG.

IE does not fully support PNG, but Firefox does, so why not exploit it?!

Because the target audience for a "Get Firefox" banner is mostly IE users, and most of them are still on IE6.

In order to effectively target IE users, you have to use an image that IE6 can can handle without playing tricks with filters, behaviors, etc.  That gives you three viable options for static images:

• 24-bit, lossy JPEGs, no transparency
  
• 8-bit indexed lossless PNG with binary transparency
• 8-bit indexed lossless GIF with binary transparency

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bah. PNG is still better over all.

 and why not have a banner that will specifically look bad and say "Can't View this? Firefox fully  supports web standard" or somethingI

can tell I'm fighting a loosing battle though so why bother. 

not a bad idea, then have javascript or somin to switch the bad image with the good image when viewed with firefox 

Deliberately sending IE a broken image and sending Firefox a good image is a classic example of browser discrimination.  (Look back at the story behind MSN and Opera Bork Edition)  And claiming that Firefox is better on that basis is actively deceptive.

It's far simpler (and more honest), as Aliendude5300 suggested, to use a format which IE should support, but dos not.  (It's still browser discrimination in the sense that you're deliberately choosing something one browser cannot display, but at least you're not sending IE inferior data.)

IMHO it won't accomplish anything -- who's going to look at a broken ad banner and say, "I need another browser so I can see this!"?  And besides, IE7 will handle alpha-transparent PNG images just fine, and it should be out within a few months (by the end of the year, IIRC).  But hey, if someone wants to try it, who am I to stop them?

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Just Transparent PNG Files! IE Doesn't Support That Even Though They Are Standard.