Deb, I think the advantage in shooting RAW is that you have so much control over the image parameters. You can change the saturation, white balance, contrast, etc. virtually without penalty, much more so than with other formats.
And, since you really aren't changing the original RAW file, you can make it look totally different if you want. Think of RAW as a digital negative.
Photoshop 7 & CS have a RAW converter that works very well for me. If you have either version it's a no-brainer to get started. If for some reason your camera isn't included in the supported list you can use the software that came with your camera. I think the advantage of using PS to convert RAW files is you can save directly to .psd format, skipping the convert to tiff and open in PS, and then save as .psd ordeal. Skips a step.
Should you shoot RAW for everything? Probably not. Using RAW for snapshots is a bit of overkill. I use my Coolpix for those type of photos & it doesn't have a RAW mode & I don't miss it for what I shoot with it.
Give it a try, I think you'll like it.