When creating materials for gameplay assets, is it better to use jpg, bitmap or targa files and why?

When creating materials for gameplay assets, is it better to use jpg, bitmap or targa files and why?

PNG is probably the best, as its quality lossless (or at least as close as it can get)
You can also use .PSD if you want.
.TGA is a decent 2nd choice, but has more compression artifacts.