Yeah, I'm on the GIF side of this argument (funny how the JIF sayers have to spell it JIF to get their point across isn't it?), but that's a terrible argument. By that logic, JPEG should be pronounced "jay-feg" because the P stands for Photographic.

Also a fun fact that I recently learned: an acronym is something that is said as a new word (eg. NASA, GIF) while something that is simply spelled out as separate letters (eg. USA, NSA) is referred to as an initialism. JPEG is kinda weird, because it's kinda both, I guess...

And before this thread devolves into a fijht to the death, everyone take a look at this thread, where everything has already been said.

EDIT:

Here are some arguments that always come up, and why I still pronounce it GIF:

Examples of words, like "gin" and "gift."

This adds nothing. The rules for hard/soft G's are not absolute.

The creator said it was pronounced like the peanut butter!

The majority of people who read the acronym clearly thought it was pronounced as a hard G, or else they wouldn't have needed correcting. Based on what the creator has been quoted saying on the topic, it sounds like the only reason he wanted it pronounced like the peanut butter was so that they could make jokes about it being like the peanut butter. Hilarious stuff. He was (is?) a programmer, not a linguist.

He created the Graphics Interchange Format. How people decide to pronounce a shortened version of the name of that format has nothing to with how its creator decides to pronounce it.

By the way, here's what CompuServe's website looks like. If someone showed you that and told you one of their programmers had an opinion on something, how much would their opinion effect yours?

TL;DR: In summary: http://i.imgur.com/q5IzNQu.jpg