Canon XSi Image Quality Raw v Jpg

This is an expansion on the Raw vs JPG conversation listed under 1.2
JPG is good for: out of camera photos requiring little to no adjustment, large volume on smaller memory cards, longer burst rate then RAW format files when shooting at continuous shot.
Raw: Good for everything image quality wise, but bad for card space, hard drive space, processing time required, and camera memory buffer (aka can’t take as many continuous shots as JPG)
Raw files are sensor data, which can be adjusted on a computer in a post processing environment.
RAW files can be opened through canon DPP or Adobe Camera Raw or other various 3rd party packages. I only use DPP or Adobe Camera Raw.
You should use Camera raw if you want to adjust white balance settings later after shooting, if you want to be able to make minor adjustments to exposure levels, change picture styles etc… All of this can be done with ease.
JPG files are already compressed in the camera, when you import them into Photoshop, you will not be able to edit them with the same precision and quality as a RAW file. The image mode has already been reduced from 16bit to 8bit when you use a JPG. This will make color transitions not as smooth, and all adjustments are limited to less tone variations, meaning you may notice going from yellow to orange, instead of a nice blend that you can achieve with a 16bit file.
That is why to get the best image quality; you will need to shoot in raw format.