I'm assuming this is an FTP server that you're storing the files on.
ASCII -- used to transfer plaintext files (anything you can open up and notepad and it'll be legible). This is done to maintain platform independence, so the files can be read on both Windows and *nix OSes without issues (this is because the two OSes use different codes for linebreaks and whatnot).
Binary -- used to tranfer everything that isn't a plaintext file. Images, zipped files, textures, etc all use this method.
Though most FTP clients have an "auto" mode that'll automatically choose the right transfer method with a very high degree of accuracy.
So, if you can open them in notepad and make out the content, use ASCII. If you can't, then use Binary. If not sure, use Auto.