The Pentax K-5 has a JPEG quality setting called "Premium", denoted by four stars, which is not available in entry-level Pentax cameras. This setting extends beyond the "Best" (three stars) setting in my K-r which already offers very good image quality. Is there a significant advantage in using this setting, or is this not worth the larger file sizes (which can easily exceed 10 MB)? Should I choose RAW instead?
I default to the three-star setting (out of four), but I always use RAW + JPEG so I can revisit the choice, because there are situations where yes, it makes a difference. Particularly, when there is strong contrast across color channels, like a tree with red leaves or flowers against a blue sky, JPEG compression artifacts can be surprising visible with the three-star setting.
For most cases, you won't be able to discern a difference in double-blind testing, but in the times when it's needed, it's nice to have.
And, if I get a shot I know is a keeper, I often go back in-camera and do a careful RAW conversion, tuning the white-balance and tone curve as well as saving in the top-quality JPEG. I don't mind paying the space price for my top few images, even if the image quality difference is imperceptible. This isn't as powerful or flexible as PC-based conversion, but I can do it on the subway or whereever and then use it instantly (rather than joining the backlog of hobby to-dos). If an all-RAW workflow is more your style, that's also a totally legitimate choice, and makes this meaningless — but if your approach is more like mine, it's a nice thing.
Here's some examples. There's no red leaves, so flowering trees will have to stand in. (The white in the background of the first sequence is bokeh, not clouds, by the way; it's the same white tree as in the second sequence, but from a different angle.)
Each of the four samples is converted to JPEG in-camera from the same RAW file, and then cropped and saved as PNG for the demonstration here. These are 1:1 pixel-for-pixel views of the images from the camera.
I've done a number of things to exacerbate the JPEG compression artifacts. First, I cranked up the sliders on contrast and saturation to make the example more dramatic. And, I saved in 2 megapixel mode rather than using my camera's full resolution, which increases the relative size of the JPEG artifacts while hiding other types of artifacts. I didn't activate the noise reduction; maybe I should have even though these are at ISO 200.
It's pretty obvious that ★ is terrible, and there's definite artifacts at ★★. If you have a lower-model Pentax camera, I'd definitely stick to ★★★. The difference between ★★★ and ★★★★ is more subtle, but it is there if you look closely. The following images illustrate that, by showing the pixels at greater than their real size. (For the red, it's a detail of the above at 4×, and for the white it's the whole square doubled.)
You should be able to tell without me explaining that that's ★★★ on the left and ★★★★ on the right. I made the red one bigger because I wanted to draw attention to the posterization of the bokeh.
At this level, noise in the sky is apparent, and one could reasonably argue that the JPEG defects are literally lost in the noise, but the blocky artifacts are apparent in the sky immediately around the edges of the petals, and in the smoothness of the blurred white flowers behind. And if you go back to the 100% view and look closely, you'll see it now if you didn't before.
Here are the file sizes for the sample images at each level, with the averaged size reduction in %. These are the sizes of the whole image, not the crop. (Remember, these are two-megapixel images; scale up correspondingly for real-world use; I'd compare to the RAW file size or an uncompressed TIFF, except by starting by scaling down, I've made that pointless. The relative levels are useful in any case.)
To me, in special situations and for special photos, that's worth it (but you can see why I default to ★★★ most of the time).
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This is very much personal preference.
JPEG to RAW can make a vast difference. But when comparing between top JPEG modes, for almost all situations the differences will be very small in practice.
Using RAW leaves all options open after the event. If you can tolerate the file sizes then RAW is best. RAW + JPEG gives you better in-camera post view and ease of quick processing after download. Factors which affect RAW choice include camera card capacity, write time, download time, storage, processing, possibly less in-camera image quality for post-view (depends on camera).
Do the differences matter to YOU?: If using only JPEG settings, find a scene that has high information content (detail, contrast, lighting levels) and take a series of photos at various JPEG settings and then "pixel peep" the end results. (I found that flower beds with many small and different flowers are quite good for this, but choose scenes that suit what you want to achieve.) Per comparison, crop selected parts of two nominally identical scenes and set up a "flicker comparator" to jump to and fro between the two - eg put the two in a folder by themselves and sequentially step between them so you get a two photo slide show. Manual step on lets you do this at speed of your choice. Step between the two repeatedly and compare differences, which will usually be minute.
If the differences you see matter to you more than the file size, use the best quality setting. If the differences are minute or irrelevant and you care more about storage capacity on disk or card and handling times, then use the lower setting. The "weighting" given to various factors varies by user. Of all the effects of file size, the one that probably matters most to me is the limits it places on the number of sequential photos I can take in a given time - affected by buffer size, card write speed and camera processing speed. "Bride walking up the aisle" or "first kiss", rally car yumping, surfer turning on a wave top, child running, pole vaulter at play, ... all are greatly affected by the ability to take bursts of multiple photos when needed. The sizeof RAW+JPEG compared to say JPEG fine / 3 stars / ... can be 2 or 3 times as many photos in a burst. In some case JPEG can be taken continually with RAW + JPEG only in short bursts. Some other quite different parameter may matter more to you. eg card capacity during a day out. (So far about 50 GB/day has been enough worst case for me. The latest cameras promise to up that :-().