Those who use the RAW format to store images in their digital cameras won't take anything less than that. Those who use JPEG want JPEG.
So what's the deal?
RAW -for all of you non geeky humans- is what it says it is. Raw. It's the data captured by the camera sensors and saved to the memory card with minimal processing by the camera circuitary. Any of your non-optical corrections like white balance or funky effects have no effect on the raw data file. It's more akin to an undeveloped negative for a film camera. You can't do anything with it till you develop it, but as many of us would vouch - it makes a difference if you get your film developed at a convenience store or a pro photography studio. Or better still, your own home lab if you got the bug.
yes I just compared your twinky camera electronics to seven eleven (no offense); and your top of the line computer with Photoshop or Aperture to the cool pro lab. All exaggeration aside, most cameras will give you decent processed images ready to be printed out or emailed or posted and tagged on facebook. But if you drive a stick shift or make your own greeting cards, you'll appreciate that controlling some aspects of the process that your care about is more than pure functionality. So what if you end up with a crappy looking pic you just created out of the raw file?
What's the final word- Raw or Jpeg?
Well... Jpeg will not kill you. But if you want to give Raw a chance, go for it. Keep in mind that Raw files are huge and you'll need a good image processing software to make the best of it. If you can't afford one, there are open source softwares available for free.
Many digital cameras apply some kind of perspective correction that's unique to the fixed or removable lens on that camera. Make sure you can live without it or that the software you use has built in routines to apply the same correction. In my opinion, correcting the perspective electronically instead of optically stinks.
I'm going to leave it here. You'll find a lot of information on Raw and other formats online if you want to get in the trenches of technicalities. Just use what you are comfortable with. As for me, I shoot in Jpeg. I can engage in a philosophical discussion on the reasons...but maybe some other time.