Originally Posted by polobunny
PNG is not "totaly" lossless like one would think (in Photoshop). It is forced to be under a certain number of colors (256 methinks). It's still a good compression method because it searches for pattern in the image, thus not removing any definition like JPEG would do. Transparency in PNG however is not supported by Internet explorer. Other rule compliant browsers don't have a problem with it. ;P
Gif, while being good for animation, normally takes more space than PNG. It's suitable for small animation, but please don't go over the 250kb barrier as it can be pretty frustrating for some forumers.
For easy blending, right click your font layer, and choose "Blending..." or soemthing like that. Here you get a few effects like embossing, drop shadow, glow, etc.