“Don’t think i want/need raw, i don’t even use it on my DSLR…yet “
Ah…
But larger-sensored cameras tend to have better JPEG output because they have better data coming in. Small-sensor cameras can have crappy JPEG output because (a) the data coming in is a lot lower quality than from an APS-C sensor, and (b) they’re in a pretty saturated market segment which values low noise above high detail, notably at higher ISOs.
My compact, the Ricoh GRD2, is perhaps the clearest example of this. Ricoh’s earlier cameras were panned in reviews for their noise, but all Ricoh were doing was retaining detail (which is why a lot of “enthusiasts” still love the older Ricohs – they’re good at grainy, detailed shots especially in B&W). Ricoh then decided to follow the herd and stamp on all the noise – the result being horrible, smeary JPEGs. The GRD2 has dreadful JPEG output but, importantly, because the lens is probably the best quality you’ll find on a compact, the raw files are outstanding; I’ve had prints up to 4×3 feet in size from it.
Compare this with the JPEG output from my GF1 which is fine (not perfect, but fine) at all ISOs. The larger sensor means better data (so there’s less damage done to detail in getting the noise to an “acceptable” level), and arguably it’s aimed at a different market (which may value detail-vs-noise differently).
So personally I think raw is probably more important for small sensors than for large.