Loss of quality in conversion from 16 to 8 bit

Hi, I have a raw image taken with a Canon G12 and converted to 16 bit psd file.  When converting to 8 bit I notice a significant loss of oomph to the image - iI don't know how to describe it but it seems a little washed out, a lack of saturation, contrast or vibrance or something.  Still not bad but not as good.  With 16M colors available in 8 bit images, is this normal or have I got a setting wrong somewhere eg color space etc ?  TIA

Hi. Progress!  I paid more attention to the conversion process and converted a 16 bit image (with Photoshop CS5 Extended 64bit),
to 8 bit using the menu Image/Mode/8 bit, and the appearance of the images is identical in Photoshop CS5.  This would seem to rule out monitor issues.
However when viewed in PSE8,  a significant amount of vibrance/brightness/saturation (for want of a better term) is absent from the 8 bit image.  Alternatively, or perhaps in addition to that, the 16 bit seemed to have MORE vibrance/brightness/saturation than the PSCS5 version. I checked the color settings in PSE8 and I had "Optimize for printing" checked so I changed it to "optimize for screen" and updated thumbnails, and there was no change to the discrepancy between the two copies of the photo in question. Could there be a difference in the way PSE8 displays 16 bit and 8 bit images or the way PSE8 uses information recorded by CS5/ACR 6.3 during the conversion from Canon raw .cr2 to .psd 16bit?  i.e. does PSCS5/ACR 6.3 record in the psd file, the tweaks made during the conversion from cr2 to psd, and this information be used during display in PSE8 somehow?  TIA again.

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