JPEG is widely used on the Net because you can store the same picture in a smaller file than with GIFs: what might start as a full-colour file taking up 2Mb can be squeezed down into 100Kb of JPEG with no noticeable loss of quality; the GIF version would probably take 500Kb. Also, JPEG stores colour information using 24 bits per pixel (or picture element - the smallest part of the digital image), allowing it to capture 16 million colours. GIF uses 8 bits per pixel, which limits it to 256 colours. Most PCs can't display more than 256 colours anyway, so the advantage - at least in visual terms - is lost. But when you are choosing between GIF or JPEG versions of pictures of the planets stored at Nasa's Web site, for example, the JPEG versions will take less time to download and less room on your hard disk.
GIF does have the edge over JPEG in efficiently storing images with only a few distinct colours and is faster to decompress from the stored file. But it's a small penalty with today's powerful machines. So if you want to be popular when you post pictures on the Web or to newsgroups, offer them in JPEG.