According to Search Engine Roundtable, you should always use alt attributes in the images instead of the Title attribute. The alt attribute is used to describe an image and is also known as the 'alternate text' for an image.

For example, an image tag for a boat might look like this:
<img src="boat.gif" alt="Big Boat">

In a thread at the Google Groups, Googler Reid said, “Google concentrates on the information provided in the alt attribute.". However, he did not nullify the importance of the title tag. As per his post, title tag can compliment the alt attribute, when it comes to pictures. But he did mention that Google concentrates on the alt attribute as far as images are concerned. Additionally, Reid also redirects to a video where Matt Cutts talks about ALT attributes.

Here are some interesting excerpts from the Google Groups Thread:

“Two questions….

My wordpress allows me to add "title" and "caption" to images that I insert (The "caption" is alt tag) Both show up in the code for the photo.

Are both of the important ?

Also, does the inclusion of images affect overall SEO? (aside from Google image search.) If they are beneficial, when to you see a point of diminishing returns.

Also, I have been told that too many images on the home page can have an adverse effect.”

“Well, it was a little funny..

I realize that everyone on this forum is volunteering their time, so I don't want to be wasteful of it.

Actually, I did wade through the search results, and the only consensus I saw was that alt tags are useful… I did not find anything about the use of "title" images. Also, I am not seeing anything about over-use of images on the front page, etc.

Then, again, I frequently can't find my shoes in the morning, either.”

Googler Reid's Post:

“webado brings up an excellent point that alt attribute text should be human readable text. The alt attribute specifies text that is rendered when an element, such as an image, cannot be loaded. This is especially useful for users accessing sites with a screen reader, a mobile phone, or a low bandwidth connection where disabling images decreases load time. If your alt attribute is full of hyphens, ask yourself if that would be readable or useful for your users. The same thing applies to the amount of images on your home page.

Concerning your question about title attributes, Googlebot generally concentrates on the information provided in the alt attribute, so feel free to complement the alt attribute with the title attribute if it provides value for your users. For more information, check out a video of Matt Cutts talking about smart uses of alt attributes:“

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