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Since search engines don't index images, they can't index all the text that your web site has in image format. To fix this problem, there are ALT tags, which are basically images' descriptions.
ALT tags are an excellent way of dealing with images, but they're not the solution. Not all engines are capable of reading ALT tags. Engines such as Excite, Inktomi and Northern Light don't pay any attention to them. However, you will never be penalized for the use of ALT tags.
Avoiding the use of spam
Search engines do not penalize for ALT tags, or for a certain amount of keywords in ALT tags. There's a general rule of not repeating keywords more than 3-7 times. Although this rule is not specific to ALT tags, better safe than sorry.
Describe images
Add more keywords
Should be used for each image
Make site accessible to visually impaired
Keywords should not be repeated more than 7 times