RAW to DNG just some simple advice please

I would like some advice on converting RAW to DNG. I have read on line that it is a good practice to convert all my RAW images to DNG after uploading them. I am using Adobe Lightroom 2.2. When I use "Convert to Linear Image", my files double in size. Should I be using "Preserve RAW Image" ? What is best practice and why? Should I be "embedding original RAW image"? Should I leave it as the one Panasonic/Lumix RAW format?
I am really confused and would appreciate any advice?
I have tried reading all the threads on this site and they are just too technical and confusing for me at this stage. I just want to know that I am following good practice and treating my images in the best possible way. I have much to learn about using Lightroom but would just like to get past what formats to actually use.
Should I be doing all my edits on the jpeg instead and not even bother with the RAW?

Ann,
>I have just tried the time-honoured Photoshop "Difference" Test.
Not disputing the possible veracity of
your conclusion, but
the time-honoured Photoshop "Difference" Test should be reviewed.
Even Bruce Fraser didn't adhere to that test.
If there should be a very small difference in a given pixel, the otherwise 255,255,255 pixel would then appear as 255,254,255 or 254,255,255 or something similar, which you would still
see as black on your monitor, regardless of magnification.
Two better, more definitive testing methods would be (a) one suggested by Bruce Fraser himself (I'll post it if and when I find the exact text), and (b) a new (to me) method suggested by someone in the Color Managament and Photoshop Windows forums, which follows:
(NOTE: only the methodology is of interest and pertinent, not the questionable context in which it has brought up and used.)
* 1) Open the two images to be compared in Photoshop
* 2) Move one image as a layer over the other one
* 3) select "Difference" as blending mode in the layers palette
* 4) now the whole image should appear seemingly black on the monitor
[So far this is the traditional,
"time honored" method.]
* 5) select the magic wand tool with these settings:
Tolerance: 0/
Anti-alias: no/
Contiguous: no/
Sample All Layers: yes
* 6) click somewhere into the formerly gray area
Explanation: you just selected all completely black pixels (0,0,0) i.e. all pixels that are identical in both layers.
* 7) you should see "marching ants" forming rectangular patterns
* 8_) invert the selection (Shift Command I)
Explanation: the selection now covers all the other pixels, i.e. all pixels which are different between both layers.
* 9) create a new empty layer and select it in the layers palette
* 10) set the foreground color to white
* 11) fill the selection with white (Alt+backspace on Windows, accordingly on Mac)
* 12) set the blending modes of all layers back to normal
Explanation: you now see all identical pixels in their respective color
and all different pixels in white.
This method is a lot more sensitive than the traditional one which stops at step #4 above.

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