Am I right in saying that you should also make a point of naming each image in your website as well as using 'Alt Text' so the file has valid name rather than say 'pic1.jpg' e.g. a picture of a horse would be 'horse.jpg'.

To give the image a name, just select 'Names' after right clicking on the image and in this example you would add the folowing (filename="horse") without the brackets. The only issue I've found in doing this is that you have to remember to use a different 'name' if you have say two pictures of horses as it will overwrite the first one and you will then have the same picture in two locations on the website.

From what I remember, Google ranks page content higher if the image files are relevant to the text they correspond with, and indeed the keywords and description on that page.