You should keep the file size of your images as small as is reasonable. The smaller your image file sizes, the faster your page will load. When you are working from your hard drive, even extremely large images will appear to load quickly, because your hard drive is very fast. If you are testing your pages on a high-speed Internet line, that is close to the server, large images may also appear to load quickly. But for people on slower connections or far away from the server, large images will drastically increase the time it takes a page to load.
You want to keep your entire page well under a hundred kilobytes, unless you’ve got a very specific purpose where people coming to the site expect longer download times. Keeping your entire page under forty kilobytes is even nicer.
The trick to keeping your images small is to use the correct image format, use the smallest number of colors you need, and to keep the image itself as small as you can on your page.
An image that is 200 pixels wide by 200 pixels tall has a total of 40,000 pixels. If the image uses eight bits for color, that brings it to 320,000 bits. Compression will bring that down drastically, But if you do nothing but reduce the image to 180 by 180 pixels, that will reduce the image “file size” by over a hundred thousand to 204,800 (these numbers are drastic oversimplifications).
Dropping the width and height of an image by half will reduce the file size of an image to a quarter of its previous size. If you can drop the number of colors by half, that will also half the previous size. A graphics program such as GraphicConverter or Adobe Photoshop can assist you making these choices of image size and quality vs. file size.