While everyone preaches using RAW, P&S users in general are very happy with Fine / Large JPEG files, especially above water shooters who will buy 99% of cameras.
The compression of the newest cameras in the highest resolution JPEG is so minimal that I think if divers worked on getting a decent exposure in AWB or Daylight settings (or whatever they like color balance wise) this RAW obsession would become moot.
I'd bet the mfrs. believe most buyers of a $200-$400 P&S camera aren't the type to sit in front a computer and tweek RAW files for extended times.
YMMV
dhaas
Dave,
Your sentiments on what the "average" consumer wants are probably correct. The camera companies aren't run by total morons. They sell what they think most people will want to buy. Any feature that costs something to implement (remember, they are also paying people to develop these features and write code, not just factory people assembling these things) and isn't perceived to increase the bottom line in a measureable way is likely not to be offered unless the company has some other motivation (for example, when I worked for Honda, the company focused on environmental issues and safety issues despite a lack of immediate customer demand because they believed that this helped their image and the overall customer perception of the brand name (and, to some extent, they also believed it was the right thing to do (and, customers believing that Honda wanted to do the right thing was part of the image . . . well you get the idea))).
If one ignores the "debate" in the mostly "professional" realm between Nikon and Canon shooters, the average digicam customer doesn't really care about the brand name so much anymore (within certain bounds) as much as how many megapixels there are, what the price is, how much zoom it has (and most people don't even do enough research to understand that "digital zoom" doesn't count), and how idiot-proof it is to ge the pictures back out of it. The only saving grace sometimes is that the internet has made it very easy for the average buyer to read reviews posted by people who do claim to care so the industry does improve things like noise response in order to be viewed positively, get the four or five stars, and protect their market share.
Now, as for RAW. You can pry my RAW from my cold, dead, carpal-tunnel-ridden fingers (actually now that I think about it, on most dives I'm two-thirds of the way there already). Sure, .jpg works well for most things and the issue has not, for quite a while, been compression. My camera (and it is an outdated, orphaned, poor old EOS 10D, so maybe upgrading will solve all my problems, right guys?) does a pretty decent job in AWB, but I almost always end up adjusting it in the RAW converter. Also, I try to get the proper exposure but if I don't, then what? Adjusting WB, exposure, shadows and highlights in the RAW converter is relatively straightforward. I've never been able to do that stuff easily with a .jpg with the "regular" Photoshop controls. Of course, this is probably due, in no small part, to my own ineptitude, but hey, why drive a nail with my fist if I can use a hammer? With this hobby (and for me it is, admittedly, just that) I do not claim to be so proud as to toss something into Ansel Adams' most valuable darkroom accessory just because I happened to get the exposure slightly wrong, when I could instead make it serviceable with a little TLCS2 . . .
Mike