As a general rule of thumb for webpages, Images are only supposed to enhance a page's content, but should never be the content.

This was especially true when the Internet was in it's infancy, and there we still many browsers in use that did not display images, and even those that did, Broadband connections were not yet invented, and people were still surfing the internet over the slow telephone lines, and images would load very slowly if at all.

Even now that Broadband connections are commonplace and you can rest assured that your images will be seen on your webpage(s), search engines can not look at your images the same way a human can, and therefore can not rank your search status based off of your images!

Therefore, it was wise to design your website such that all of it's purposes and functions can still be carried out without displaying a single image, so that when a search engine parses the text on your site, it will rank your site high.

But by no means should your site be free of images...

The perfect solution: the ALT attribute!

Example:
<IMG SRC="images/logo.jpg" ALT="Widgets R Us!" HEIGHT="50" WIDTH="125">

This is perfect because not only does it give the search engine something to parse when ranking your webiste, but in the event the image doesn't load for any reason, the ALT text is displayed inside the image placeholder, so you can still get the point across to humans as well as search engines who can not see your image(s).

Moral: use the ALT attribute in all your images!

Related Articles:

The many wonderful uses of the ALT attribute in the <IMG> tag!
Make any image meaningful

GIF & JPG images. What's the difference?
Education on images

PNG images - The next big thing?
...as opposed to GIF's and JPG's

HTML Tip: ALIGN="CENTER" doesn't work in the <IMG> tag!