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If you had to pick between using an Alt attribute in your images versus a Title attribute in your images, I would go with an Alt attribute. The alt attribute is basically "alternate text" for your image, it is used to describe the image. For example, an image tag for a boat might look like this:
<img src="boat.gif" alt="Big Boat">
In a Google Groups thread, Googler, Reid said that Google "concentrates on the information provided in the alt attribute." He did not say that the title attribute is not used, in fact, he said that the title attribute can "complement" the alt attribute. But Reid does make an effort to say that Google "concentrates" on the alt attribute when it comes to pictures.
In addition, Reid links to Using ALT attributes smartly by Matt Cutts at Google Webmaster Central Blog. Here is Matt's video on the ALT attribute:
Forum discussion at Google Groups.
