When you have your camera set to capture image files in the JPEG file type, every shot you take gets edited in many ways in the camera and is intended as a ready-to-print final image.
Image color saturation, tonal contrast and image sharpening are all edits done in the camera before they can be displayed on the rear LCD.
But each of those edits is done to the entire image (global edits).
So you use a shallow DoF to create a blured background, and then the JPEG editing sharpens that blurred background making it a little less blurred. That's like taking your six-shooter out of your holster and shooting yourself in the foot.
Who was it that decided how your JPEG photos should be edited? A bunch of Japanese camera software engineers who would never see your photo, that's who.
Your camera is designed to let you change how much, but not where in the photo, each of those JPEG edits are done, but the range of adjustment they provide is crude and not nearly as precise as edits done using image editing software.
Lets assume that is all OK with you, and you figure you'll spruce up the editing using PsE 10.
We have to back up some, but it's worth it to stay with me.
Your D7000's image sensor initially records
everything you shoot as a Raw image data file. It does that so it can translate the color information it records as 12-bit or 14-bit numbers (your choice in the D7000 menus). You may wonder what that has to do with anything, but it's known as bit-depth -
Bit Depth.
The biggest number 12-bits can represent is 4096. The biggest number 14-bits can represent is 16,384. In other words, when you set your D7000 to record at a 12-bit depth it can record a maximum of 4096 different gradations of color tone in each of the 3 color channels - Red, Green, and Blue (RGB). When set to the 14-bit depth the maximum gradations of color tone that can be recorded in each of the 3 color channels increases to 16,384 per color channel.
Your D7000 is likely still set to the default - 12-bits, and that's OK for Raw capture.
You're shooting JPEG and wondering what you gain by shooting Raw. JPEG only allows a maximum bit-depth of 8-bits, which is only 256 gradations of color tone in each of the 3 color channels.
In other words, between the time you release the shutter, and your JPEG gets written onto your memory card, the gradations of color tone in each of the 3 color channels gets reduced from 4096 gradations of color tone in each of the 3 color channels, to just 256 gradations of color tone in each of the 3 color channels.
That's about 80% of the color data your D7000 image sensor captured. The way the camera reduces the from 4096 to 256 is really simple. It simply throws away 3840 gradations of color tone in each of the 3 color channels.
But, that's only part of the story, because JPEG isn't done making changes, which you have no control over, to your photo. JPEG also converts the 16.2 million pixel into 8x8, 8x16, or 16x16 pixels units called Minimum Coded Units, which then become the smallest portion of a JPEG you can edit.
An 8x8 pixel square, which is 64 pixels, in essense just became a single pixel, essentially (for post process editing purposes) making your D7000 a 0.25 MP camera. (16,200,000 dividd by 64 = 253,125)
All of that is why
JPEGs have little, if any, post process editing headroom.
But, we all know there is no such thing as a free lunch.
To get the maximum editing headroom we record the Raw file to our memory cards.
Every Raw file needs some amount of editing to become a finished, photograph.
You really should save the Raw, the .PSD and the JPEG. The Raw file is the most valuable of the 3.
