Originally Posted by ManuH 
All things being equal the raw file contains much more information.
1) K10D raws are 36-bits color vs 24-bits for jpeg.
2) jpeg is compressed, hard edges will often suffer.
3) jpeg are created by the tiny camera on-board processor in a fraction of a second, leading to some compromises
This is the theory. In practice most people won't see any significant differences. The real difference is when you process the picture, for reasons a lot of people already pointed out in this thread.
I can see #1 and #2, but not so sure about #3. Yeah, the camera doesn't have a massive CPU, but it does have hardware optimized to do just jpeg compression. I don't think a lack of processing power leads to inherently inferior jpegs; in fact the output from most cameras can be pretty damn decent.