Image format choices are very dependent on the content of the image being saved. GIF is not a format that is viable for LFS skins, even if you can save an image smaller than in other formats.

The only format that is viable for skin downloads, which overall contain a vast variety of different forms of imagery, is JPG. No other graphic format offers a better result as often for as few bytes.

Quote from Dalek0220 :

Still, if you realize that most skins are at 2048x2048, and were saved as a .png, instead of .jpg, the size would be bigger. When saved at 512x512, .png's size will be smaller. Makes sense?

If you realize that a 2048x2048 image consists of 4x4 512 pixel squares, it doesn't make alot of sense.

Quote from Dalek0220 :

I understand that. Still, if you realize that most skins are at 2048x2048, and were saved as a .png, instead of .jpg, the size would be bigger. When saved at 512x512, .png's size will be smaller. Makes sense?

That's outright wrong. Just look at the juice pack example: the png is more than twice the size of the jpg. That is largely due to the very bad compression, but still, you simply can't say that pngs are smaller up to a certain resolution.

Possibly have the option of both.

PNG gives (generally) better quality with pictures that are 'cartoony' large blocks of colour, often seperated with a thin line of another colour, like the juice box. Jpegs give much better quality when the picture's colours blend slightly into each, as in a photograph.

To be honest, all but the most detailed and intricate skins fall into the former category.

The way I see it, we can have a shadow map that remains the same across all skins for the same car. What is transfered around can be jpg or png. Skins are locally layered to produce the dds that's finally used. This way, the simple blocks of color that most skins are benefit from lossless png's, and the shadows with gradient can stay detailed and large in jpg locally.

jpg's are really lousy whenever you have sharp edges... The colors always overshoot so you get white on the black side and black on the white side.

I guess proper markings/emblems could finally work if we have layered skins.