Wel depends, basically when shooting RAW format the camera just captures the data and doesn't proces it.
Shooting a preset way (like "portret"or "landscape") will proces the pic in a predetermined (by the manufacturer) way.
Shooting in JPG format will proces the info too.
Shooting raw uses most storage room but leaves the post production to you. While jpg's can look nice straight out of the camera the data is managed and lost in that proces. Raw pictures will (always, at least for me) look worse fresh out of the camera, but can be postprocessed to look their best in your eyes.
For instance sharpening, most camera's have some sort of filter (moire) in front of the CCD.This causes the image to be soft (not sharp) removing it would give sharper images, but less control over other unwanted effects (Moire) wich would be much harder to remove. Sharpening pp is easy. JPG's are sharpened in camera already.
So JPG's can look better out of the camera, but there is less info stored, so pp isn't easy (loss of data).
Camera RAW often look worse, but with pp can give a far better picture.