Most people use png or jpg file formats for their images. Both are good but we recommend using png format especially if you plan on uploading your items to Facebook parties. PNG files uses lossless compression for no image degradation while JPG format uses "lossy" compression to reduce the size of an image by using a formula to determine what data to discard.
When uploading images to our system and Facebook the images are scaled down to a size that is more suitable for web site usage. This saves disk space as well as increases the load times so that users do not have to wait for large images files to be loaded just to be scalled down anyway to a display size for a page. Image scaling will always cause some image degradation and is why we do some post processing to clean up the image. Facebook does the same thing when you upload images to their site so if your uploaded image has been compressed already, then the image on Facebook may end up being of poor quality.
With PNG files the degradation is a lot less since there is more data to work with from the beginning where jpg files typically by default save the image at 90% quality which already degrades the image as soon as you save it. If you are using JPG image files, be sure to save the image at 100% quality their by reducing the degradation when an image is scaled to size
When uploading photos to Facebook, we recommend at least browsing over new images to insure that your photos are good quality and your customers can see good details of the items patterns.