WHAT IS A GIF?

A gif or .gif as you would see it after a file name (rad.gif) is a lossless file format for images.  It was developed in 1987 by the internet service provider CompuServe to reduce the size of images, but is still commonly used because no information is lost during the compression of data.  

HOW DO YOU PRONOUNCE IT?

The developer of the format, Steve Wilhite, say's that they are pronounced with soft g sound, like Giraffe. He is famous for saying choosy developers choose gif.  On the other hand gif is an acronym for Graphics Interchange Format, and it's hard to apply grammatical rules to the pronunciation of an acronym.  So go ahead and call it what you want.  We sure do.