The only pratical difference between shooting PEF or DNG is file size. The PEF is losslessly compressed, whereas the DNG isn't. The net benefit is that you will get approx 30-50% more shots on a card with PEF.
Here is some data on the difference between the two Raw formats, plus TIFF and JPEG, the first is for the K10D but the essential differences are the same for the K20D.
Another factor is that some earlier Epson storage viewers (e.g. the P-2000) can read the embedded JPEG's in the PEF files, but not in the DNG files. Therefore some users prefer to shoot in PEF and store and view them with their Epson viewers, then, if they prefer working with DNG files, they convert the PEF files to losslessly compressed DNG files either when uploading to their computers or at a later stage in their workflow. You can convert to lossless compressed DNG with either the stand alone DNG converter or within ACR, the difference in file size between a compressed DNG and compressed PEF is not much.
It's worth noting that Pentax's own Photo Browser and Photo Lab software will not read Adobe's compressed DNG format, only in-camera produced, or Photo Browser PEF -> DNG conversions, which are uncompressed.
Converters such as ACR and Silkypix can handle all types. Capture One v4.0 can read K10D PEF's but not K20D PEF's, it can read both compressed or uncompressed DNG's from both cameras. I don't know about others.
For those folk who don't have the latest Photoshop CS3, but want to convert the K20D PEF's (or the uncompressed in-camera DNG's) to compressed DNG's so that you can use your older software, you can download and use the latest DNG desktop converter (v4.4) free from the Adobe website:
Adobe - Photoshop : For Windows : Adobe DNG Converter and Camera Raw 4.4 update : Thank You
Best regards