Q: Why PNG?
A: For some time now due to my temporary internet connection, which is threatening to run into a semi-permanent solution, low quality JPG's and GIF's look horrid and when I save them they look the same so that's how they look on the banner I make you if your icon has placed.
In future I ask you to please use PNG unless you don't mind getting a banner with a horrid version of your icon.
(Because you can of course always replace the icon on the banner with the non-horrid version.)
Basically it's up to you, I'm not going to force you to use PNG. :)
My problem illustrated:
Last icon: Red & Green