My Mate Dave's examples of GIFs & JPGs that show you how to squeeze memory out of your images. The larger the image, the more effect this has.

Examples of GIFs
1kb Black & white images can be reduced to 2 colours. This makes them really small in memory, but you loose any soft edges so they can look a bit jagged.	2kb This simple 2 colour image can be reduced to a 16 colour pallet without too much quality loss. The edges are still soft, but as you can see they're not perfect.	4kb Because of the soft shadow, this image looks best with 256 colours. The edges of the letters look better too. This pallet would be be ideal for all of these small images.

Examples of JPGs
10kb These JPGs use a 16 million colour pallet. This one was saved as high quality (or low compression).	4kb This JPG has been compressed to medium quality. As you can see it has started to break up a bit.	2kb This one has been compressed to really low quality to show a point. It looks crap, but it's very very small.