The header upload section accepts images with the following file extensions:
- gif
- jpeg
- jpg
- jpe
- png
- svg
- swf
As a general rule, GIF images are best for line drawings and simple designs, and JPEG is best for complex images such as photographs. GIFs can have transparent areas too, but you should still take care to match the background colour of the logo to the colour of the header area in your website because it can look really yucky if you let the background colour show through and there are jagged whitish edges because you designed the logo with a white background.
PNG, SVG and SWF are newer file formats. PNG is sort of a replacement for GIFs - they can have lots of colours where GIF can only have 256 colours - but support for PNG isn't usually as good, so many people's browsers won't have proper transparency support for instance. They also tend to take longer to download. SVG and SWF (Flash) require extra programs to display, so shouldn't really be used as a header logo unless you really know that your target audience will have these installed.
Lastly, try not to make it too big, both in the display size and the size of the resulting file!
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