[ohenry]

DNG is simply an attempt to standardize RAW files. You can convert your RAW files to DNG for archival purposes if you wish. There are some benefits (or detriments depending on how you view it) with regards to sidecar files and I believe the files are a bit smaller (but I'm not fully certain of that).

In Lightroom, you can import your files as native RAW or convert to DNG. You don't save to DNG, per se. When you export a file or edit it in PS, you convert it to TIFF (or jpg, as you see fit).