I have seen many WAP pages with colour images and graphics as logos, photos, and graphics. Everywhere on the web would say the standard is 1bit BMP or WBMP. If this is so, how did some of the WAP pages display colour images?
Example with colour images: http://wap.miworld.com.sg
Nowadays can also be used other formats. You should check example from Nokia GSM Phone Characteristic document which image formats are supported on different Nokia phone models.