Like all that Alcina said, basically RAW file recorded everything from the sensor in 16 bits and write it uncompressed to the card so you can get maximum data for the picture. Resolution does not really change between RAW and JPEG. However this is not true of Nikon RAW file from current Nikon such as D70 which is 12 bits compressed (eventhough Nikon clamined that its compression is lossless, whatever that is). The major nice thing like Alcina said, with JPEG, you are stuck with white balance made by the camera whereas when you import the picture in RAW, you do have the option of importing the picture as is and tweak it yourself. Oly auto white balance is not bad but when you are shooting in unusal environment like underwater, especially if the strobe is a bit off, it does not always do to auto white balance accurately.