FINALLY - you get where I'm coming from!


.
I never said jpg isn't concenient, and I agree jpg can produce perfectly good results, I just don't think anyon can argue that jpg has as much flexiility as a RAW file. Its a simple fact, there is no debate. I hope people don't mind me pastng this bit of text from luminous landscape, I like the way it is explained in simple terms and its a much better job than I would do. People can see pictures and read the rest here
http://www.luminous-landscape.com/tutorials/understanding-series/u-raw-files.shtml
***taken from luminous landscape****
Reasons to Shoot JPG
Files are smaller and therefore more of them fit on a card.
For many applications image quality is more than sufficient (family snapshots, news images).
Small files are more easily transmitted wirelessly and online. This is important to newspaper photographers.
Many photographers don't have the time or inclination to post-process their files.
Many cameras (especially digicams) can not shoot quickly when working in raw mode. Some lower-end models can't record raw files at all.
Reasons to Shoot Raw
A raw file is comparable to the latent image contained in an exposed but undeveloped piece of film. It holds exactly what the imaging chip recorded. Nothing more. Nothing less. This means that the photographer is able to extract the maximum possible image quality, whether now or in the future. A good analogy with the traditional world of film is that you have the opportunity to use a different type of developer or development time at any point in the future if one comes along that you think might do a better job of processing the image.
Raw files have not had while balance set. They are tagged with whatever the camera's setting was, (either that which was manually set or via auto-white-balance), but the actual data has not been changed. This allows one to set any colour temperature and white balance one wishes after the fact with no image degradation. It should be understood that once the file has been converted from the linear space and has had a gamma curve applied (such as in a JPG) white balance can no longer be properly done.
File linearization and colour filter array (Bayer) conversion is done on a computer with a fast and powerful microprocessor. This allows much more sophisticated algorithms to be used than those done in a camera with its slower and less powerful processor and with less space for complex conversion programs.
The raw file is tagged with contrast and saturation information as set in the camera by the user, but the actual image data has not been changed. The user is free to set these based on a per-image evaluation rather than use one or two generalized settings for all images taken.
Possibly the biggest advantage of shooting raw is that one has a 16 bit image (post raw conversion) to work with. This means that the file has 65,536 levels to work with. This is opposed to a JPG file's 8 bit space with just 256 brightness levels available. This is important when editing an image, particularly if one is trying to open up shadows or alter brightness in any significant way.
Figures #1 and #2 below shows why. Assuming for this example a 5 stop dynamic range, you can see how much data is found in each of the brightness levels in the image. In other words with a 12 bit file the two darkest levels of the file combined have some 384 brightness levels to work with.
An 8 bit JPG file on the other hand has considerably less. Both the sRGB and Adobe RGB colour spaces use a gamma 2.2 encoding. Gamma encoding reallocates encoding levels from the upper f-stops into the lower f-stops to compensate for the human eye's greater sensitivity to absolute changes in the darker tone range. Therefore an 8 bit JPG file has just 47 brightness levels available in the bottom two stops.
A 12 Bit raw File
Within the first F/Stop, which contains the Brightest Tones 2048 levels available
Within the second F/Stop, which contains Bright Tones 1024 levels available
Within the third F/Stop, which contains the Mid-Tones 512 levels available
Within the fourth F/Stop, which contains Dark Tones 256 levels available
Within the fifth F/Stop, which contains the Darkest Tones 128 levels available
Figure #1
An 8 Bit JPG File
Within the first F/Stop, which contains the Brightest Tones 69 levels available
Within the second F/Stop, which contains Bright Tones 50 levels available
Within the third F/Stop, which contains the Mid-Tones 37 levels available
Within the fourth F/Stop, which contains Dark Tones 27 levels available
Within the fifth F/Stop, which contains the Darkest Tones 20 levels available
Figure #2
Now imagine that you want to make a modest adjustment to the file in Photoshop or any other editing program. Which would you rather have to work with, 47 levels or 384 levels? Clearly the 8 bit file will show posterization, which is the effect that one sees when instead of smooth transitions between brightness levels you see abrupt jumps.
Because a raw file has not been processed in any way, if new and improved methods of linearizing files, applying colour filter array decoding, or other image processing advances are made, you can return to your archived raw files and work on them afresh. A JPG file, on the other hand, is fully baked.
*************************
If anyones interested there is a lot of good information over at this site and its well explained so its good for people just starting out too.