RAW

I had been assuming - doubtless someone will correct me if I'm adrift here - that the RAW files should be treated like film negatives, i.e. you take your prints from them (convert to JPEG or whatver is your preferred format) and play with those, leaving the RAW 'negatives' stashed out of the way.

The plus side is that you can always go back and take another copy from the RAW if need be. The downside is that you need a lot of storage space, but seeing as the cost of that has been dropping steeply for a long time now, I don't really regard that as a problem. 

I think your right Mike, it just takes every thing in, then its up to you to alter, using the software. Much like a digital darkroom.

I really do have to get my head round this though, everyone seems to swear by RAW. I can take RAW shots, but need the software to convert it!!!

The manufacturer of your camera almost certainly has a RAW converter available for download that will enable Windows to see and open the file; you can then save the file into another format. And, as Paul has commented, some editing software has a range of RAW converters built-in.

The other advantage of RAW is it is uncompressed data directly from the camera's sensor. TIFF is the next best thing for quality, but the files are huge.