PNG8 - Use this format for overlay services that need to have a transparent background, such as roads and boundaries. PNG 8 creates tiles of very small size on disk with no loss of information. However, you should use a different PNG format if your map contains more than 256 colors. Imagery, hillshades, gradient fills, transparency, and the antialiasing caching option can easily push your map over 256 colors.
PNG24 - You can use this format for overlay services, such as roads and boundaries, that have more than 256 colors (if fewer than 256 colors, use PNG 8). Do not use PNG 24 if your tiles will be viewed in Internet Explorer version 6 or previous.
PNG32 - Use this format for overlay services, such as roads and boundaries, that have more than 256 colors. This format creates larger tiles than PNG 24, but the tiles are fully supported in all browsers.
JPEG - Use this format for base map services that have large color variation and do not need to have a transparent background. For example, raster imagery tends to work well with JPEG.