What is JPEG virus, is there any virus in image files?

JPEG or JPG (Joint Photographic Experts Group) is a popular image format used in World Wide Web. However there is almost no possibility that some virus would be added to this image files since the JPEG didn’t contain an executable code that could be triggered a virus. Some of mechanism of JPEG virus like is just a link or trigger to the infected executable files.

Some more detail explanation for JPEG virus:

• It's not a virus. The posted JPEG is actually a trojan downloader. It has no ability to spread on its own.
• It only affects users with Windows XP Service Pack 1.
• It's does not automatically execute on reading the message. The JPEG must be saved into a local folder, then the mouse pointer must be moved over the JPEG file's icon.
• The file is detected by all major antivirus engines with current virus definition files. Because of the nature of the JPEG format, it is impossible to disguise an infected JPEG file. So current signatures should detect ALL future attempts to exploit this vulnerability.

http://www.secureworks.com/research/threats/jpegvirus/

"Some anti-virus vendors may be tempted to predict the end of the world as we know it, or warn of an impending era when all graphic files should be treated with suspicion. Such experts should be ashamed of themselves," said Graham Cluley, senior technology consultant for Sophos Anti-Virus. "Not only is this virus not in the wild, but also graphic files infected by this virus are completely and utterly harmless, unless they can find an already infected machine to assist them. It's like a cold only being capable of making people who already have runny noses feel ill."
http://www.sophos.com/pressoffice/news/articles/2002/06/va_perrun.html