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Warren
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I usually go with PSD unless it's going for publication, in which case I usually send files in tiff format (especially if it needs to be CMYK). DNG is great, but I work largely in B&W with a lot of localized adjustments and duotones, so PSD makes the most sense for me.
For people shooting RAW and sticking with standard adjustments, DNG makes a ton of sense. Get and read the Bruce Fraser book "Camera RAW" regarding the Photoshop function of the same name, internalize it, and things will be a hell of a lot easier for you.
It is also important to consider colorspace. Adobe RGB, for example has too narrow a color gamut to properly accommodate a lot of images. To this end, the wider gamut of ProPhoto RGB makes a lot more sense.
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