What are the formats supported by the iPhone in the APIC (album covers) field of ID3 tags?
The same as iTunes; which in turn takes pretty much anything you can throw at it.
Probably it won't read the tags, when you copy files to your iPod Touch/iPhone covers are separately stored on the iPod Touch/iPhone and there's a separate SQLite database next to the iTunes database.
If you want to learn more about the internal workings and are able to use Linux I recommend you to play with libgpod from gtkpod. iPod Touch/iPhone iTunes is heavily changed since iPhone OS 3.0 (they have switched to SQLite). So you will probably need to compile the latest versions of the software. (When you use Ubuntu Linux you can use PPA repositories for all or most) See here (Link: http://marcansoft.com/blog/2009/10/iphone-syncing-on-linux-part-2) for an informative blogpost with all the information you will need. (Don't forget to read the comments ;))