Escalar,
I went through the same excitement you did when I first got my S2 a few months ago.
Working in RAW is not just for advanced users, although if you're shooting for a magazine or some other publication you will probably want RAW. If you want to squeeze the most out of your shots, RAW is the way to go. It's the equivalent of a digital "negative" that you can use over and over again to produce photos. Whereas .jpg is a compressed file that has lost some information by the time it's stored on your media card.
When you're in the FinePix Viewer, you can convert from RAW to TIFF. First click on a photo you want to convert. Click on "Tools", which opens a drop down menu. Click on "Convert RAW to TIFF" -- I think that's what it says, or something similar to that.
You then get the window to convert. You should to experiment with each feature, like "Curves" to see what happens to your file. When you're done tweaking all the fine points of the photo, click on Convert. You will get a TIFF file that's about 64 megabytes. I then open that file in Photoshop elements, which prompts you to convert from 16 bit to 8 bit color (accept this choice to open the file). Edit as needed in PE. I usually don't need to do much editing after fine-tunine in the RAW coverter. If I do any editing, it's to rotate the photo, then use very minimal Unsharp Mask. All the brightness and color you can adjust during the RAW-TIFF conversion. Then you'll have to convert to .jpg when you're all through. You have to choice to save it as a large, medium or small .jpg file. Pick whichever one suits your needs. For net use, small files are probably OK, but if you want the most detail for prints, pick the large file.
I usually delete the TIFF file when I'm completely done b/c it uses so much disk space. I'll save the RAW file on my hard drive, and make copies on CD of the RAW and .jpg files.
This of course takes some time each evening after a shoot. If you want quick photos without having to do a lot of processing, just shoot fine .jpg. The S2 takes wonderful .jpg photos. And make backup copies of all your files, well-labeled for future reference.
One of the limitations with RAW is that you can squeeze in only 77 shots on a 1 gig-card, whereas you can get a few hundred shots in fine .jpg and even more on regular .jpg. If you're worried about space, just buy another card!
Good luck, and happy snappy.