Technically, you can embed whatever you feel like.

Of course, it's up to the rendering software to decide what to do
with them. Inkscape just passes on the raw image data to GTK+ and
lets it deal with the pixmap and rendering.

"Conforming" viewers need to support png, jpeg and svg in the <image>
element. Other things may work, depending on which software is
showing it, the OS it is on, and even the version of libs & toolkits.
However, to stay the most compatible, stick to just those three.