Edward Ingold , Sep 02, 2004; 09:21 a.m.
Now that TIFF files can be saved with layers, PSD files lose their major advantage. PSD files with layers are somewhat smaller than corresponding TIFF files, but not significantly so. The problem with PSD files is that few browsers recognize them, including NikonView. Layered TIFF files contain a flattened image and thumbnail (when created in Photoshop CS) that has a high degree of compatibility with other programs and viewers.
PSD files may preserve other properties besides layers. If you do a lot of correction, it may be advisable to keep PSD files as masters, and make TIFF or JPEG copies for other uses.