Olympus E-P1 (white, with silver 14-42mm f3.5-5.6 lens)

The main purpose of RAW image format is to capture a photo with as little processing as possible. In a JPEG file, several parameters are applied to the image, such as white balance, saturation and contrast, among other things; then the file is compressed using a lossy scheme. With RAW format you are generally getting as much information as your digital camera can record with, so in essence, RAW acts very much like a digital negative. The advantage of having a large amount of data in each image is that the photographer has more to work with in post-processing, and can cull out any unwanted data manually. The disadvantage is that the files are very large, causing more room to be taken up on the camera's memory card, and also slowing down the camera's ability to capture shots because of recording time.

Another thing to be aware of with RAW format is that each digital camera manufacturer creates their own proprietary type of RAW, so not all photo processing software will work with all RAW photos.

Aperture-priority is an automated exposure mode that will allow the photographer to set the aperture, and the camera will then set the appropriate shutter speed based on the light meter reading. In this way, a photographer can control depth of field easily and create images with selective focus. This works well when you have a distracting or unattractive background that you want to keep out of focus, or just want to have more creative options in your images.

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Shutter-priority is an automated exposure mode that will allow the photographer to set the shutter speed, and the camera will then set the appropriate aperture based on the light meter reading. Fast shutter speeds are ideal for capturing sharp images of high speed events, such as sports and other high action occasions. Slow shutter speeds can be set to get artistic blur in images, such as moving water or car taillights at night. Using shutter-priority will allow such flexibility while providing good exposure for your photos.

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When using handheld cameras at slow shutter speeds, or with high optical zoom, image stabilization (aka anti-shake) will help with capturing sharper images. There are two types of image stabilization, optical and electronic. Electronic, or digital, stabilization works by shifting pixels within the image frame to interpolate sharpness. Optical sharpness is attained by physical movement within either the camera body or the lens element, which compensates for handheld shaking. Of the two, optical is generally considered more favorable by most photographers.

Read more in the Digital Camera Buying Guide