dpi = dots per inch.
The dpi rating of an image is really dependent on how you are going to be viewing it. If your monitor is 12" wide and 1024 pixels wide then the dpi rating of anything you view on your monitor will be 85dpi (1024 dots / 12").
So, when saving a JPG dpi basically doesn't mean much. It's just stored in the JPG file in case you are sending it to someone who is going to print it out on paper. Then they need to know at how many dots per inch to print the picture. Most home printers print around 300dpi. If you take an image that's 150dpi and print it on your printer then the printer will actually have to print 4 dots per pixel to get the image to come out the same size.
As for compression: When preparing an image for the net I compress it as much as possible without loosing too much quality
Some images can take more compression than others without visable losing quality. Just play around with it, and for the sake of dialup users such as myself please err on the side of more compression
Thanks.