hi Tammy,
Adobe Photoshop is definitely the industry standard for editing - I use a combination of Lightroom (also made by Adobe) and Photoshop CS.
I mostly shoot Raw, but it depends on the camera I'm using (I love my Fuji S5Pro camera but it's unbearably slow in Raw so I always shoot jpeg with that one) But to clarify (since your question mentioned raw vs auto, jpeg isn't an auto mode - I shoot manual regardless of whether I'm shooting jpeg or raw.
this raw vs jpeg debate tends to be a huge point of discussion between photographers.. and I'm sure you'll be able to find waaay better explanations that what I can give - so please take this with a grain of salt..
- Jpeg files are smaller, and take up less room. But with jpeg you really have to nail the exposure because you don't have the same amount of latitude to edit.
The major advantage to raw has to do with the amount of data retained in the original file. (and here's the part where I get all 'photo geek' on you ) When you shoot and edit in raw you do so in the full 16-bit mode (which allows for more gradation in colors and will hold up to more extreme editing). Jpeg is captured in 8-bit mode - and the integrity of the file is compromised every time you edit and resave the image (you lose compression). The thing is for most printing purposes you still have to convert the raw file to 8-bit mode, but in theory the raw file (shot in raw and edited in raw) will be a better 8-bits.
does that help at all? or have I thoroughly confused you? feel free to pm me to clarify (or call - sometimes it's way easier to explain over the phone than to write it out)