Yea, .gifs are a lot better.

I use Jasc Animation Shop 3 for animating - the only problem with that program is that it doesn't recognise transparency. So my animations must have coloured or picture backgrounds.
I use Adobe Photoshop 7 for graphics - and I absolutely love it!

I got Animation Shop with Paint Shop Pro (on the same CD) which I got really cheap (it was a pirate version! mua hahaha) and I downloaded Photoshop off the internet (you can even download serial numbers - *evil cackle*).