Hi Bob,
The simple answer is if the graphic is a photo, save it a jpg. If the graphic is text or has very few colors, save it as a gif. You can adjust the jpg slider to see the file size difference as you raise the quality. I usually use 6 as my default.
In Photoshop 5.5, use the "Save for Web" option for gif. You can also use this for JPG, but I like using "Save a copy" for jpg's in 5.5.
In either case always save a photoshop psd so you always have your work
You can check out our gif vs jpg tutorial here:
Gif vs JPG
Hope that helps.
Allen