What is better? i've noticed with attachment page google SEO image results go to the thumbnail from the gallery but with image file it goes to the larger image, and usually on google image searches the big ones come first. What's your take on this which option is better?
I think with an attachment image as a page or a image embedded within or near a post you can more effectively use alt-tag code with text keyword descriptions of which the text will get properly indexed by Google. This will increase your site being higher in search engine results. As for a image link I don't know, unless if you use keywords as the anchor text. As for image results displayed on searches, bigger is better (I search images a lot) but not necessarily displaying the associated content you want...