Normally the webserver prepares an image to be embedded in the HTML page. The arduino has the raw data to display, but I think it has far to little resources (30K) to create a usefull image of the data. The only way it might be done is creating some kind of vectormap liek svg as for graphs these are smaller than jpg's.
imho a far easier way to create graphs is to install a webserver on an old PC e.g. http://www.apachefriends.org/en/xampp.html, that fetches the raw data from the Arduino and creates a graph's from the data. If you consider using an old PC it may be simpler to use that PC as a log server and let the arduino send all the raw data to that server. A php script can make a csv file from your raw data. Another php script can make graphs from csv files e.g. pChart | a PHP Charting library
sofar my 2 cents,
Rob