As noizinum said gif for graphic (since it's lower quality, loading fatser) and photos .jpg.
However iWeb websites are usually slow loading websites since they are full of graphics.
There's an application called WebCrusher. A really good piece of software which I would recommend you. It makes your iWeb created pages much lighter hence loading much faster without seeing any loss of quality in the images and the pages in general. My english version of the iWeb FAQ has a size of 52,1 MB (made of 1765 files), after I run it through WebCrusher the size was 28,1 MB. It saved 24 MB which is about 46% of the original size of the website! This without any noticeable change in its appearance. No noticeable loss in quality of the pictures, ...
If you want to try or buy WebCrusher click here