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Anonymous
http://en.wikipedia.org/wiki/Portable_Network_Graphics http://en.wikipedia.org/wiki/JPEG
As you can see, the goals of the formats are different. PNG is a lossless format that compresses by storing repeated colors and such, while JPEG is lossy and compresses by applying a fourier transform and then removing information that is likely to go unnoticed.
Both formats have their pros and contras. People have mentioned that PNG performs well on vector traces, that is actually not an important benefit of PNG, since for vector images SVG is much better suited all round. No, the important pro of PNG is that it is lossless, so if you intend to do any post-processing with the image the results are likely to be better.
JPEG files on the other hand, even at compression levels where no artifacting is visible, are much smaller than PNG files. Which means that in the same space you can actually store a better JPEG because you can up the resolution. The information to storage space ratio is almost always better for JPEG.
So what do you want to use? Well, that depends on your priorities. For wallpapers, which are not intended for post-processing (otherwise people would ship the original layers and vector art along as well) JPEG is in most cases the better choice, especially for people who have a large collection, for example because they use a wallpaper rotation utility or put their wallpapers in their screensaver. But for things like original scans, PNG may be the better choice.
Also, as a last note that doesn't really apply to wallpapers, PNG provides native transparency. If you want that effect with JPEG you have to use a separate JPEG for the transparency mask, which is what a lot of computer games do.
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