Here are some excerpts from an article listed below:
JPEG is the most commonly used. Why? Mainly because it is a compressed format and uses less space. You can thus take more photos with the same flash card. And it produces good-enough pictures for most people.
But in compressing the image, JPEG throws away some details from the photo, and thus you may have some quality degradation.
Many professionals -- particularly those who want total control over how their pictures will look like in their final form, be it for the web, fine art blowup prints or for publication in a glossy magazine -- prefer RAW. That's because RAW is as pure an image as you can get, no in-camera processing involved. Others refer to it as the "digital negative," which you can print your way, either printed straight or with some manipulations like improved color or better contrast.
In contrast, JPEG images, directly from the camera, are usually already processed. Colors and contrast have been improved, the images sharpened a bit. The better cameras, though, allow you to define the in-camera processing involved. Thus, a JPEG image usually looks better right out of the box.
But in the hands of an expert, particularly those adept with image processing software like Photoshop, a RAW image can become a work of art, worthy of being displayed in an art gallery.
RAW also has the advantage of capturing more color, and even more as camera technology progresses, unlike JPEG which has a limited color range. Experts say RAW has more latitude, meaning, you can make little mistakes in your exposure and your software can still help bail you out. You can also capture more details in the shadow areas, a well as in the highlights (bright spots).
RAW is thus used by demanding professionals who have all the time to tweak their images.
Because every expert vouches for RAW, I asked around if JPEG is that bad. Most everybody agrees it isn't that bad.
The bottom line is, if you really want to get the best quality in your images and storage space and the time consumed in tweaking your images is not a problem, then by all means shoot RAW.