Yes use geographical coordinates longitude and latitude for Google/Bing Maps.
When the world file is present, ArcGIS performs the image-to-world transformation. The image-to-world transformation is a six-parameter affine transformation in the form of
The transformation parameters are stored in the world file in this order:
20.17541308822119 (A)
0.00000000000000 (D)
0.00000000000000 (B)
-20.17541308822119 (E)
424178.11472601280548 (C)
4313415.90726399607956 (F)
The equation:
x1 = Ax + By + C
y1 = Dx + Ey + F
where
x1 = calculated x-coordinate of the pixel on the map
y1 = calculated y-coordinate of the pixel on the map
x = column number of a pixel in the image
y = row number of a pixel in the image
A = x-scale; dimension of a pixel in map units in x direction
B, D = rotation angle
C, F = translation parameters; x,y map coordinates of the center of the upper left pixel
E = negative of y-scale; dimension of a pixel in map units in y direction
For Images to be overlayed with Bing Maps (MapCruncher should be used. )
for Google Maps use http://mapki.com/wiki/Add_Your_Own_Custom_Map
Both use Mercator Projection see parameters for Google Maps
useful links http://econym.org.uk/gmap/custommap.htm