Vanessa Fox at the Google Webmaster Central Blog posted tips on using images on your site. In short, she explains that:
(1) Don’t put the bulk of your visible text in images, use real text
(2) Use alt tags to describe the images
(3) Do not keyword stuff the alt tags
(4) Alt tags are more important when your navigation is all images
(5) A webmaster should be watchful of the “image-to-text ratio on your page”
(6) Vanessa then pitched Google Sitemaps, with “Taking advantage of Image search”