A question that inevitably comes up once you’ve purchased a DSLR is whether to capture photographs in RAW or JPG. The majority of point-and-shoot cameras don’t give you the option, but you can hack your Canon point-and-shoot camera to record photos in RAW.
Digital Photography School has an in-depth article on RAW vs. JPG formats. It should answer the majority of questions regarding the subject. NeoCamera also has a nice article on RAW myths. I was under the impression that photographers switched from JPG to RAW as they developed their post-processing skills, but some have actually switched back to JPG.
I still shoot in JPG. I normally do some limited post-production processing (e.g. white balance, contrast, cropping, etc.) to my JPG photos. Picasa supports RAW photos, but Picnik and other photo editors do not. I’ve shot in RAW, and quite honestly, I don’t see much of a difference. I also have an old PC that’s not very fast, so editing RAW photos only slows me down. Besides, I have so many other things to do to improve my photography. Maybe when my photos are actually composed better and when I get a faster computer, I’ll switch to shooting in RAW.
Update: CNET has an interesting article in favor of using RAW if your camera can do so.