RAW images are resource pigs. But you can seriously alter the images. A JPEG has some latitude for adjustment, but not too much, as most of the image data was discarded during the compression.
RAW is almost like a digital negative.
JPEG is more like a high grade print from that negative.
That all said, I often shoot JPEG only. Only when quality really matters, like weddings or situations where light or white balance is proving to be a challenge, do I opt for using RAW. I almost never use RAW-only -- I'll pick RAW+JPEG. Sometimes the JPEG from the camera can look better than my own editing of the RAW. Most photographers will avoid admitting that, or insist on some silly notion that I'm simply not very skilled at editing, but good is good -- I don't really care what process caused it. The photo matters, not my ego of mastering Photoshop.
You cannot be a photographer and not own some version of Adobe Photoshop and/or Adobe Lightroom. Not having those tools is like being a film photographer with no access to a darkroom. I highly suggest buying the boxes versions cheaply from Amazon
. A friend of mine use Lightroom, and I use mostly Adobe Bridge + Photoshop. (Bridge comes with Photoshop CS2-CS5.)