It isn't a coincidence that MIXED was pre-selected by the software for you: Edit service caching properties in Manager—ArcGIS Server | Documentation for ArcGIS Enterprise
When you initialize a new cache, ArcGIS examines the layers in your map and selects a default image format for you. If your map contains only vector layers, the default is PNG. If at least one raster layer is detected, the default is MIXED.
But Esri does say the user should validate that the default makes sense with their data.
You should examine this default and determine if it makes sense based on the purpose of your map.
The question of whether one should use JPG, PNG, or some other format for an image isn't unique to Esri nor is it unique to building map caches. There are lots of websites, blogs, etc... that discuss the trade-offs between using various image formats to display various types of information. That said, I think Esri's documentation covers it best:
Before committing to an image format for a large cache, build a small cache of a representative area of your map and examine the tile quality and performance in a test application. If you are working with multiple caches, build a small test cache for each, and add them to a test application to make sure they overlay as expected. This allows you to make adjustments before you create the entire cache.