JPEG is not good in high contrast areas, such as around text. The file format doesn't record pixel colors, but instead uses formulas to approximate them. This works well for relatively low contrast areas, but in high contrast areas, the formulas produce "artifacts" -- the odd colored pixels surrounding the text, in your case. GIF is much better for high contrast areas, but it can only use 256 colors. If you have solid color text against a solid or limited-palette background, GIF is the better choice. PNG is another possibility. PNG-8 is similar to GIF, in that it allows 256 colors; PNG-24 allows a full palette, like JPEG, but without the artifacts, so it is ideal for text superimposed on photographs. PNG-24 will be a bit larger than a highly compressed JPEG, but probably smaller than a maximum quality JPEG. It may or may not display properly in IE6 or earlier, but it's well supported in IE7, Firefox, and Safari.