The format you use to save your file should be the most archival one that is available to you and that is not JPEG. It will depend and the type of system that you set up. I use the raw format that comes out of the camera. There are several things that you really need to understand clearly. JPEG is basically a file transfer protocol, it was designed in the mid 90s as a way for press photographers to transfer images over the phone lines. It compresses files down to a level that was compatible with the main way of transfer at that time, which was dial up. Simply by using compression it is a lossy file format. It compresses the the file by losing bits and pieces of the image data or bit depth. It loses data in several ways, most importantly by it's creation. A 40D works in resident 14 bit analog to digital conversion, which basically means that each pixel offers a information in over a trillion combinations of color and exposure data when you consider the whole sensor. If you save in raw this is the information you are saving, the total of the information that the sensor processed. When you save in TIFF you are changing the file from a 14 bit file to a 16 bit file. This does not increase the information, it just means that none is lost. A JPEG works in 8 bits, which reduces the original information down to mere millions of combinations for the data. A JPEG loses this information through out the whole image. It works on the same principle that your eyes work, it scans the image in a way very similar to your eye and loses data that your eyes won't miss, a little color depth here, a little detail there. Most of the time you never know that it's gone. The important thing to remember is that once it's gone it's gone forever. Every time you work with that file, UNLESS you work from a copy of that file, you will lose more information, because the process does it all again. Jpeg is a good format for what it is designed for, which is transferring images via the web.
IF you can work with raw format, do so. FInd and use one of the nondestructive editing solutions available, I use Aperture because I work in Mac. I'm not sure if DPP is nondestructive, I haven't used it. I know that the windows version that came with my Digital Rebel was destructive, in that edits made to those files . I haven't found a way to undo them once it has been saved.
