A number of modern, top end compact cameras, including the superzooms, allow the user a choice of image formats, usually JPEG or RAW.  There are advantages of both, but if you want to work with what is best described as a digital negative, the RAW is a good option.

The JPEG format is used extensively and is the accepted format for images across the board.  A JPEG is compressed and processed by your camera, which results in a user friendly image that is instantly accepted by web sites, photographic sites and image printing sites.  JPEG is likely to be the default setting on your camera.

Excellent quality images and prints can result from a JPEG image and further post processing is possible using any number of photo processing software.  Every time a JPEG image is opened in your post processing software, it loses a little of its quality.  Continually opening and closing a JPEG file will cause it to deteriorate noticeably.

A RAW image is a digitally recorded image, but it is not processed by the camera, or compressed to the same extent as the JPEG.  This allows the photographer to make any adjustments to the image without compromising the overall quality of the picture.  A RAW file can be opened and closed as many times as you wish without any loss in quality. 

The big advantage is the original RAW file can be opened using a RAW converter.  Several adjustments can be made using this software, including the white balance (the white balance can’t be changed on a JPEG) and then the image can be saved as a JPEG where further adjustments can be made – if required of course.  If you are unhappy with the result, this JPEG can be discarded and another made from the original RAW file.

The major disadvantage associated with RAW files is their size.  For example, a 12mp JPEG image might be around 6mb in size.  The same image taken as a RAW file will be about twice that.  This can cause some storage issues, although this is fast becoming a moot point as computer hard drives and external hard drive sizes increase, able to store thousands of RAW files.

Another disadvantage of RAW files is the time it takes to process them.  Quite often the RAW converters are slower to load and display RAW files, which then have to be saved as JPEGS.  Processing JPEGS is usually quite a bit faster, as the images are smaller and the software can load and display them very quickly.

I initially shot JPEGS exclusively, and then read about the advantages of RAW files.  I changed to RAW, but was soon frustrated with the space they occupied on my memory card and the time it took to process them.  I switched back to JPEGS.

Then I was lucky enough to have a few of my photographs published.  To meet the quality requirements of the publisher, I had to shoot RAW.  With a DPI of 300, JPEGS could not match the size/dpi ratio required for printing.

Since then, I have shot exclusively in RAW.  Space, as mentioned above, is no longer an issue.  The memory cards used in cameras now are large and have room for hundreds of RAW images.  The processing side is still slow, but the results are worth it. 

If you are interested only in taking snapshots and printing photos up to A4 size, then JPEGS are fine.  If however, you wish to have large prints made from your images or you intend to publish your pictures, then RAW is the best option.