Most photographers deal with JPEGS either coming out of a digital camera or in Photoshop/Aperture/Lightroom when making images web ready. Unfortunately, JPEGS are a lossy form of compression. This means that the heavier the compression, the more the image is degraded. If you compress detailed images, you get more loss than if you compress soft images. Remember that once you have saved an image as a JPEG, you have compressed it. You are compounding the degradation to the image if you open it, modify it in any way, and save it again. This creates poor results, so only save an image as a JPEG once.
A JPEG’S strong point is its ability to save continuous tone better than GIF files, which is why most Web photo renderings should be saved as JPEGS.