You should base your decision to use RGBA or color-index mode on what hardware is available and on what your application needs. For most systems, more colors can be simultaneously represented with RGBA mode than with color-index mode. Also, for several effects, such as shading, lighting, texture mapping, and fog, RGBA provides more flexibility than color-index mode.
You might prefer to use color-index mode in the following cases:
If you're porting an existing application that makes significant use of color-index mode, it might be easiest to not change to RGBA mode.
If you have only a small number n of bitplanes available and if you need fewer than 2n different colors, you should consider color-index mode.
If you have a limited number of bitplanes available, RGBA mode might produce noticeably coarse shading. Color-index mode might work better if you have limited shading requirements (only shades of gray, for example).
Color-index mode can be useful for various tricks, such as color-map animation and drawing in layers. See Chapter 13 for more information.
In general, use RGBA mode: It works with texture mapping and works better with lighting, shading, fog, antialiasing, and blending.
OpenGL Programming Guide