Chaos Zero 64 said:
Or GIF or JPEG. All three have their strengths and weaknesses.
* PNG transparencies don't handle very well in IE unless they're 256-color, but otherwise works wonderfully; no color loss, no artifacts, and a small file size.
* GIF is limited to 256 colors, which can cause noticable discoloration IF your picture is in excess of that (if working with sprites, that's doubtful). It allows for animation and transparencies, though.
* JPEG is very high-color, but can cause annoying artifacts in some cases and has no transparency. Useful for images that do NOT need to have their palettes intact, like photos; not handy for other things, such as sprites.
Whatever you do, though, no bitmaps. They're huge. They work fine for your HDD, but it's a major no-no on the 'net.