This is a description on the differences of these two file formats (JPG and RAW) and what I prefer to shoot in...and why. You can decide for yourself what you prefer and need. Each photographer has their own workflows and needs can vary.
Disclosure: "JPG" and "RAW" are mentioned nearly 2 dozen times in this post =)
When your camera is set to JPG shooting your images are compressed and processed in the camera, immediately after snapping your shot; this is known as JPG compression. This processing in other words sets the color, white balance, tint, and exposure of the image dependent on what your camera settings are. Now many DSLR cameras have the option to shoot in RAW mode, meaning the image is not compressed at all and all processing must be done afterwards on the computer.
A key fact to note with an uncompressed RAW image is since all the processing is done on the computer you have a large amount of control over the white-balance, tint, hue, and exposure even after your image is taken. This can be monumental if you need to correct or fine tune any of these details on your images. With a JPG compressed image this processing begins in the camera and the image is compressed before you ever touch it in your processing software.
If you are a beginner and you are just learning what you prefer for white balance and exposure or a brand newbie and have no idea what you are doing with the technical camera side, I would say it's best to shoot in RAW. This way if you must correct something you have more control and image detail to work with. With a JPG compressed image you have much less control on correcting issues you might not have noticed during your shoot.
Now if you are a seasoned pro and you are very familiar with your exposure and white-balance while shooting then it may not be such an important decision whether to shoot in JPG or RAW; you likely will not be doing a lot of correcting maybe just some fine-tuning. However, I do prefer to shoot in RAW for most of my work. One reason being a typical client prints a 20x30 canvas of their baby's photo and I want that image to have the most detail as possible. I have also noticed a great difference when tweaking my white-balance in Lightroom 3. For instance if I I decide the Kelvin I shot at wasn't what I preferred after all I can just type in the Kelvin temperature number with a RAW image whereas with a JPG image I do not have this level of control. I do edit each of my images individually and I love making each one a fine piece of art.
Also, because JPG images are compressed they are much smaller files than a RAW file. It makes sense that a RAW file contains more details then as it is 2-3 times larger in size than the JPG. You will need larger memory cards and likely more storage space on your computer when shooting in RAW. I recommend to just use an external drive and backup RAW images off your computer's hard drive to save the space. I actually just delete the RAW versions of images after I've proofed the session down to the keepers and made my own JPG compressions. I do not take hundreds of images for each session though so I don't find the size of RAW images a problem. Once I got the shot I move on to the next one.
**The details on all my informational & tip blog posts are bits and pieces of information I've learned along the way through my journey of photography either through reading books or old fashioned trial & error. I have been photographing for 25 years as a hobby with the last 7 as a professional business. I offer photography workshops for photographers wishing to build or grow their "Baby's First Year" business. Thanks for reading =)