It is well known that JPEG2000 has a variety of advantages over its predecessor JPEG. JPEG2000 not only allows images to be coded with clearly better visual image quality, it also addresses a series of other issues. Unification of lossless and lossy compression modes, robustness to bit-errors to allow image transmission over noisy channels and provision of regions of interest (ROIs) are only some of those that have been incorporated into the new standard. In this paper we look at the JPEG2000 vs. JPEG debate from an image retrieval standpoint. While it seems evident that image compression will have a negative effect on the performance of retrieval algorithms our aim is to provide quantitative results of how severe this performance drop would be for JPEG2000 compression in comparison to standard JPEG encoding. Our results show that while high compression causes problems for retrieval of JPEG images, the retrieval performance of JPEG2000 images is almost independent of compression ratio...