When I teach beginner workshops, I always ask, "Who shoots in JPEG and who shoots in RAW?" The most common answer is JPEG. The biggest reason why is that JPEGS are easier to share. Unfortunately, most people don't know what the advantages are to using RAW images.
First, understand that a RAW image is the data directly created by your camera's sensor. ALL images start out as a RAW image. With RAW, there isn't any conversion or compression.
With a JPEG, the camera has transformed the data into a simpler, smaller file. When the image is converted into a JPEG, the camera makes decisions about what data to save and what can be deleted. The camera uses algorithms to simplify the image. While a RAW image is 20+ MB file, a JPEG of the same image will be 7 MB.
Simplifying the image destroys some of the data originally captured by the camera. The camera is making choices about color, contrast, saturation and resolution that you might not approve of. Capturing in RAW allows you to completely change any aspect of the image. Converting your image to JPEG 'locks in' a lot of the adjustments your camera chooses to make.
Furthermore, if you're wanting to adjust the color balance or exposure, you'll start to see the problems associated with the camera deleting or compressing data. Here's a video illustrating what I'm talking about:
I hope I've convinced you to shoot your images in RAW rather than JPEG. There is the added challenge of converting your image to JPEG after you have edited the image, but most editing software makes it easy to convert and share the image in the JPEG format so your grandma can open it in her email. :)
-Eric