Ah, the age-old debate... which file to shoot? JPEG or RAW? (By the way, why we call it RAW, I have no idea. It's not an acronym. It doesn't stand for anything. It's really just raw.)
Here's the positives for each:
Smaller files (more fit on your memory card)
Processed (some in-camera editing takes place so they can appear sharper and with better color)
Faster (it doesn't take your camera as long to write the file to the memory card)
Not a proprietary file format
You don't need a special program (like LR or ACR or Bridge) to view the files
16-bit pixel depth (holds MUCH more info per pixel)
Larger files (more data = good!)
Easier editing (you can correct a lot more)
White balancing can be done after the fact
Endless possibilities (these files have so much information that, really, right now we are limited by the capabilities of the programs in which we view them. In the future, another RAW editor might be introduced that can do even more with the pixel data. This means that we could go back to our RAW files we took years ago and re-edit. Who knows what kinds of things we might be able to correct in the future.)
JPEG files consist of 256 tones. RAW holds 4,096. What does this mean? When you shoot in JPEG your camera is deciding which 3,840 tones to throw out. JPEG files can only hold 8-bits of pixel depth whereas RAW can hold 16-bits. This is a huge difference.
You are going to notice this difference in bits when you are looking at your histogram in Photoshop while making edits. If you have more than a one-stop over or underexposure to correct, your histogram is going to fall apart a LOT easier when you edit a JPEG versus editing a RAW file. Posterization is going to happen more quickly (gaps in the histogram). NOTE: Lightroom is a big fat liar when it comes to looking at the histogram for posterization. It doesn't show gaps in the histogram and likes to pretend that everything is totally fine even when it isn't! If you have clipping in either the highlights or shadows of your histogram, it's a lot harder to recover/fill those areas.
I used to shoot RAW about a year and a half ago when I was learning Lightroom. I wanted to see what all the hoopla was about. I don't care about the large file issue (memory cards and external back-ups are super cheap these days), but I did find it moderately annoying that the images HAD to be edited. You can just post a RAW file on your blog. You can't just email it. You can't just post it on Facebook. I would selectively edit some pictures (and convert them to JPEG), but not all of them. Later on, I would want to post or print some of the non-edited files and have to stop and edit them before I could do any of that. It was a bit of a pain.
After learning the details of RAW files and trying to edit the same image as a RAW file and then as a JPEG, I've changed my tune. I'm back to shooting exclusively RAW files. I'll probably never go back. I don't want my camera making important decisions for me. I want to be able to correct my image and produce the best possible histogram. Although I don't shoot professionally (and probably never will), I still want to take professional pictures of the things I do shoot. If I were a professional photographer, I would shoot RAW for the simple fact that I'm human, I do make mistakes and I don't want to have selected the wrong white balance setting or have overexposed a shot at someone's important event. I think it's kind of like insurance. For me, half of me is taking the pictures and the other half of me is trying to be present in the moment with my little boy. There are have been plenty of times where I'm laughing so hard or paying more attention to him than my camera settings. The sun will have gone behind a cloud and I haven't compensated my shutter speed enough and ended up with an underexposed picture. This is what happens when you're a mom taking pictures (or maybe I'm the only one??), and I'd rather just have the ability to correct my issue in LR than have to be bummed about missing a good shot.
I've heard people say that since they can nail their exposure, there's no reason to shoot RAW. I still don't want to lose all that information and have my camera making decisions for me. I'd rather take the extra time and edit them myself. Besides, I've gotten SUPER quick about batch editing in LR, so it doesn't take nearly as much time as it used to. The bottom line is that my RAW edits look better than my JPEG edits.
One other thing that has really helped me with this situation is getting better about in-camera culling. Now, I look at the images and delete all the bad ones before I load them to my computer. I was terrible at this before, and I had lots of not-so-good pictures taking up my space. Space is cheap, but there's simply no reason to keep bad pictures.
Lastly, if you wanted to give this a test-run, shoot in RAW+JPEG mode in your camera. You will get one of each file and you can see the process for yourself while still having the JPEG for quick emailing/posting/etc.