Google Webmaster Central blog has a new video from, Matt Cutts, the head of Google's webspam team, providing some useful tips on how to optimize the images you include on your site, and how simply providing useful, accurate information in your ALT attributes can make your photos and pictures more discoverable on the web. Ms Emmy Cutts also makes an appearance.
In short, Matt recommends using a short but descriptive alt tag within the image source tag. Matt adds that you can name the image file something descriptive as well, such as cat-yarn.jpg, to describe a picture of a cat playing with a ball of yarn, but it is not necessary when using an alt (alternative) tag.
Here is the video: