> I've experimented a little more lately with Photoshop CS4, >and have gotten some good results, but I still see a >difference when comparing the way Picasa displays a RAW image, >and the way others including CS4 display it. > >While the colors tend to be more vibrant with CS4, I believe >that the colors and skin tones are "off" from what >we see with the naked eye. Viewing two images side by side, >the JPG sometimes seems more appealing to the eye, with >brighter colors, darker blacks and shadows, and more >"flush" skin tones, but the RAW image, as displayed, >seems more life-like, although appearing somewhat washed out, >beside the JPG.
Hope I'm not getting too pedantic here:
A raw file contains uninterpolated data and needs to be interpolated (specifically, for most cameras, "Bayer interpolation") to produce an image. The camera can do the interpolation and produce a jpeg, and software on the computer can do the interpolation, and different software does it in different ways and produces different looking images. Only Nikon software will do it the same way a Nikon camera does it and produce jpegs that look like the jpegs from the camera. You don't have to use Nikon software to process the raw file (I don't), but the resulting image won't look exactly like the jpeg produced by the camera. When the interpolation is done, various parameters are used to specify the contrast, saturation, sharpening, etc. When the camera does the interpolation (produces the jpeg) it does it according to the parameters that are specified in the menus. When the interpolation is done on a computer by a raw processor, you can adjust those parameters and see the results of adjusting them. Being able to tweak those parameters interactively and see the results on your monitor is one of the benefits of "shooting raw".
Different raw processors produce different looks, and sometimes the looks differ greatly because their default parameters (for contrast, saturation, WB etc.) are different. In theory you can get very similar looks from different raw processors by adjusting those parameters (I think).
I shoot raw+jpeg and process the raw file with CS3 or DXO. I use the camera produced jpeg as a kind of reference. I don't try to process the raw file to look exactly like the camera jpeg, but I like to know how much I'm deviating from Nikon's in-camera interpolation.
Some people are better at setting up their camera with the desired contrast, saturation, WB, etc. beforehand and do much less in post processing than others. I tend to not mess with the camera menus much and do more in raw/post processing. It's matter personal preference or desired workflow.