When you buy a DSLR or high-end compact camera like Canon G12 or Nikon P7000 and some other types you’ll get ability to shoot in RAW mode. This file type contains more information about the scene. So why some people don’t like shooting RAW? Files are larger because of all the data it has (12 MB RAW vs 4 MB JPEG Fine). These files aren’t processes by a camera and you have to process them. Basically you’re saying to the camera turn off sharpening, picture styles, contrast and many more.
But in today’s world with a lot of places where you can buy SD cards (CF can be found in camera shops) you don’t have to worry about memory. The only thing you have to decide is if you want or don’t want to process your photos. If not, go with JPEG, if yes, go with RAW. And what can you do with RAW files?
How I said it contains all data about the scene and you might not even see it in a original photo. For example here is one image of a homeless guy on Charles bridge. It was properly exposed, but thanks to quite bright cloudy sky, most of Prague’s Castle and Hradcany is overexposed.
You can’t see Prague’s panorama at all. But with post-processing and the power of RAW file, you can easily take back that detail and use it to your advantage. It also works for pseudo-HDR, where you create a image from one single file. Here is final result.