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AdobeRGB has a wider gamut, but sRgb is more compatible. If you're taking photos for the web, or for printing by a consumer lab, use sRgb. If you're using a pro lab or a lab that understands color spaces you might get slightly more vivid colors in some prints. Try it and see if you can spot the difference!

All images for the web have to be in sRgb, so you might as well work in that color space to start with rather than working in aRgb then converting it later.

Actually, there are other file formats available beyond those - it's just that those 3 formats are used for most of the images passing through PS. Regarding the 8 bit limit on JPG - that's true for the moment, but I gather that JPG2000 or whatever it's called, is just around the corner

Both TIF and PSD use non-lossy compression (TIF compression is optional, but PSD just does it without asking), which means you get your cake and you get to eat it, also.

I think jpeg2000 fell by the wayside. I seem to recall a article that protrayed the format as a "flop." I could be wrong though.

Then again, maybe I'm really wrong. Here is a list of hits from google. It looks like it is using the same compression that was used on tiff format. One interesting benefit is that it will offer loseless compression. At first glance, it looks like they are reinventing the (tiff) wheel.

JPEG 2000 exists, you can use it in Photoshop CS2 if you install the plug-in from the CD-ROM, but support for it in most software is limited at present. Search the Photoshop CS2 help for "JPEG 2000" (without the quotes) for more details and plug-in installation instructions.

If support for JPEG 2000 finds its way into operating systems and web browsers, then it will become generally useful, much as PNG has taken over from GIF in many web applications. For now, JPEG 2000 has limited applications, as most people don't have viewing software, but I've come across at least one online printing service using JPEG 2000 technology for users to send images.

There are some JPEG 2000 browser plug-ins here. I'm not sure how standard the setup that site proposes is - RFC 3745, which is Standards Track, defines Content-Types for JPEG 2000. If I read the RFC correctly, section 4.1 says still image JPEG 2000 files should be Content-Type image/jp2 and have a .jp2 extension.

Edit: There's a shell extension here to allow thumbnail display of .jp2 files in Windows Explorer.

I haven't tested any of this stuff, but it should give you a start if you want to experiment with JPEG 2000 in Windows.

David