You probably getting tired to hear from me about the RAW file. If you do, please ignore the rest of this notes.
Using the NEF format has only one real disadvantage in my mind is that the extra time you will need to invest in post-processing each image to produce a finished picture. The larger file size of the NEF format can present an issue in terms of the amount of available storage in your memory card or external storage device, but modern data storage devices are relatively cheap, so this shouldn't be too much of a concern. Equally, there can be limitations and variability with some third party software's ability to read and interpret Nikon NEF files.
The benefits, however, far outweigh the disadvantages. The following are some of the reasons you may prefer to shoot in the NEF format:
1. More consistent and smoother tonal gradations.
2. Color that is more subtle and accurate to the original subject or scene.
3. A slight increase in the level of detail that is resolved.
4. The ability to adjust exposure in post processing to correct for slight exposure errors.
5. Increased post-processing ability to correct and or change image color by resetting attributes such as the white balance value, saturation, and hue.
6. Improved control over image contrast and brightness.
There's a wide variety of third party RAW file converters that enable NEF (RAW) files to be opened in most popular digital imaging software. Examples include Adobe Camera RAW 4 (for Adobe Photoshop, Photoshop Elements, and Adobe Lightroom), Apple Aperture 2, Bibble, and Phase One. Most manufactures offer their software for a free trial period, so I recommend you try a few to see which meets your requirements before you commit to licensed purchase.
On Nikon D300, D700, and D3 "may be D80" can be configured in a number of different ways when set to record NEF files. There are two decisions to be made when setting the camera control to record NEF files: the bit depth used to record the file and whether or not compression should be applied (and, if so, what sort of compression). If your camera offers the option to have an NEF file recorded at either at 12-bit or 14-bit depth and it can be saved in either an uncompressed, lossless compressed, or compressed form. A compressed NEF files is approximately 40-50% smaller than the uncompressed NEF file, while a lossless compressed NEF file is approximately 20-40% smaller. So which of these options should you choose?
The possible benefits of using a higher bit depth can be found in the appearance of the deepest shadow values in the image, which can be rendered with richer, smoother looking tones, particularly at higher ISO settings. I say "can be" because these results will, in part, be dependent on properties of the RAW file converter that you decide to use, hence my recommendation that you experiment with a few. Even then, improvement is modest at best. If you are intent on extracting the very best an NEF file has to offer and you camera technique and workflow post-processing are impeccable, you will want to select the 14-bit option.
I'm sorry for the long notes, and I thank you for your time.