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Google Wants You To Talk About Your Images
Using ALT attributes smartly from the Google Webmaster Central blog has a new video from Matt Cutts on how to properly label your images so that Google Image search can properly rank them for relevant searches.
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 that provides more detail from Matt: