I prefer PNG format to JPG, because JPG uses lossy compression.
When I capture a screen in my PC or scan a picture or document in my scanner, I always save them as PNG format.
If a camera could save its data as PNG format, I'd use the feature even if I needed to buy more memory cards.
But I haven't see any camera that does. Why not? Why don't most (or any) cameras support PNG format?
P.S My camera doesn't support RAW.
The JPEG format has the advantage of giving small files. The RAW formats have the advantage of preserving all the data collected at the shot.
The PNG format gives neither of these advantages, so you don't even get a compromise between the other formats, you get almost only the drawbacks from both formats.
Image size notes aside, a big reason is that PNG does not have a standardized means of EXIF embedding and that will immediately shy the camera makers away from it. There would be a lot of information lost by doing image conversion to PNG in camera as a result and, for the most part, would probably been seen as a negative by most photographers.
PNG may use a lossless compression algorithm, but it is lossy in comparison to the raw data. You lose bit depth, the camera may introduce demosaicing artifacts, you may bake in a bad color balance, the camera may apply inappropriate sharpening, the in-camera noise reduction may wash out detail, etc. I don't think there's a big demand for a format that's as large as raw, but less amenable to postprocessing.
PNG is portable network graphics. It is targetted for the web, and rather simple (in colors) images. Its compression is very ineffective for realistic graphics as you will shoot with a camera, so the results are nearly uncompressed. As such you can then simply use RAW files, which do add the benefit, that there is no lossy conversion to an RGB colorspace.
The reason JPEG is used is simply that its compression is very good and works very well with more realistic graphics where individual artifacts are invisible to the human eye. In addition JPEG is supported by nearly any device and offers many way to add additional metadata, including color profiles.
No single RGB file format is able to store the image exactly as the camera sensor sees it; there is always some kind of loss in that conversion. As such it makes sense to use a format that has good compression which doesn't really harm the picture in total. If you are looking for a real lossless format, the camera's RAW is the only direction you can go, from which you then can create whatever file you desire.
Shoot RAW, develop to a PNG file (if the software allows).
http://www.luminous-landscape.com/tutorials/understanding-series/u-raw-files.shtml
Both formats have their Pros and Cons.
But the real reason why JPEG is more prevalent than PNG is that the people behind JPEG do aggressive licensing, which PNG lacks. (www.libpng.org/pub/png/)
This is very similar to MP3 vs. OGG vs. FLAC. MP3 Creators licensed aggressively in the beginning... leading to the popularity. Due to this, now, manufacturers approach MP3 to get licenses!
IMO you should always shoot in RAW, if you are not worried about memory costs RAW is the way to go. This gives you the best opportunity to correct images in post processing.
Below is a quote from: http://www.hackerfactor.com/blog/index.php?/archives/252-PNG-and-Cameras.html
PNG is absolutely wonderful for storing true 24-bit color images. Processing PNG files is very simple and requires no application-specific fields. However, it is computationally expensive, lacks the ability to store multiple images, and does not have many standardized text fields for managing meta data.
JPEG is a wasteful file format filled with specialized fields. It is also a poor choice for true color representation. However, it is computationally inexpensive, supports multiple image storage, and scaling images is trivial. And sadly, it widely accepted as the de facto standard.
