I prefer to work in RAW mode on both my Canon Powershot G3 and the EOS 300D although working with RAW files usually chews up my storage cards as well as hard disk space very quickly. Some digital photographers find that working in JPEG format saves them a great deal of post-processing time since the sharpness/contrast/white balance settings would have automatically been taken care of. However, I find that the flexibility of being able to adjust these settings in post-processing invariably gives much high quality images compared to JPEGs (even when the JPEGs are further tweaked in Photoshop). Besides, I believe that post-processing should be very much a part of digital photography itself, just like the way photographers in the past enjoyed tweaking and fine-tuning their images with dark room processing.
The above picture was taken in Chinatown just shortly after I purchased my Canon 300D last year. Working with RAW initially entailed using a version of Adobe Camera RAW (ACR) since that was the only software available then that could process RAW files with a fair amount of flexibility (the Canon File Viewer Utility was hopeless at this!). Looking at the image one year later, I tried reprocessing it now in PhaseOne’s CaptureOne. I am amazed by the detail I could still push out of the image with minimal artifacts/noise compared to the original ACR version. The RAW workflow process is definitely staying with me for now 🙂