A common question and also a tough one to answer!
Lets start with a quick run down on the two….
As you can see the basic difference between the two is who makes the decisions about the image. This is great news; allowing you to control the look of the image rather than accepting the default settings from the camera. And it gets better, when you edit the photo it doesn’t change the image in a permanent fashion as it would with a JPEG image, the changes are saved to an XMP sidecar file. This allows you to change your mind and re-edit the photo again and again.
RAW images are also very useful in correcting problems. Since exposure and white balance are linked to the image rather than applied you can change then in post processing. This is great for times where you have got the exposure wrong or when you have been shooting indoors with sodium lighting giving a strong yellow cast to the image.
This does come at a cost though. For starters a RAW image will be four times bigger than JPEG, this means you will need more storage on both your camera and on your PC. The increased size also means the number of shots you can take in a burst before your camera buffer becomes full will be vastly reduced. You will also have to spend the time processing each image meaning you can’t use the images straight away.
So, which should you use?
If you can spare the time, have a program to process the images, are shooting in difficult conditions or want to get the absolute most out of your images go RAW.
Otherwise stick with JPEG.