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Motion-JPEG is a video codec. It is still used. Almost all video capture cards before the current Firewire/DV phase used Motion-JPEG as the codec for storing digitized analog video on the computer. Motion-JPEG is prefered to DV for things like keying video (blue/green screen weatherman stuff).
JPEG on the other hand is simple a compressed still image.
Depending on your image resolution and frame rate requirement, you may be able to get away with JPEG chips.
Motion JPEG is basically a series of JPEG images synchronized with the audio stream.
MPEG is a video codec whereas JPEG is an image codec. The biggest difference is that video codecs exploit temporal redundancy to increase the amount of compression. So rather than compressing an image based on the image alone, a video codec takes images from the past and the future to predict motion and it transmits only the predicted motion vector and the difference (residual) between the actual image and the reference image.