There are multiple ways to convert a color image to b&w. The algorithm used in most cameras is probably the easiest one to program and normally not considered "the best". Using post-processing software normally gives you more options on the conversion.
Since the b&w setting is just a flag in the raw file (the color is always captured), shooting raw files with the b&w flag turned on will show you the camera's b&w version on the LCD, which can sometimes give you needed feedback about any possible exposure problems later conversions may find.
---------+---------+---------+---------+---------+ Joseph K Seattle, WA, USA
I also have a D90. AS Joseph said, i think the best way is to shoot in RAW and select the monochrome mode, so you can see the desired effect on the back LCD. Then, when uploading the photos to PS or LR you'll have all the color information to work with.
Nikonians!!! My best investment made after my camera!!!
Definitely not an expert at this, but with my D 90, I shoot in color, then convert to B&W in post processing. It seems easier, and a photo instructor I had suggested that is a good way to do it. "BEST?" Probably not, but I am a dinosaur, and haven't found a better way. I am not one who likes to play with the images much in P/P. En Camera is my favorite mode.