I have written posts about the JPEG and TIFF file format, including the advantages and disadvantages of each. Digital cameras use the JPEG format because of it’s small size, so you can store more photos on a memory card. The downside to the JPEG is that is is lossy compression, so you lose some data with each save.
An alternative to the JPEG file format is the TIFF format. While you won’t lose any informatoin with the TIFF format, you will require a lot of disk storage as each file can be quite large. For those looking for another alternative, you can try using the PNG format, which is a nice compromise between the two previous image types.