Original post by Numsgil
Having worked with DDSs, I would strongly recommend them to anyone unfamiliar with them. You can reduce the memory footprint (in VRAM I mean) by 4 to 8 times (depending on which DXT format you're using). Which means you can cram more or larger textures into the card, and get better quality results.
While this is true, it has nothing to do with the DDS format. You can obviously also load uncompressed data from a PNG, or some other custom format, and compress it on the fly. That's what we do. It has the advantage that compression can be turned on and off by a user quality preference setting, and that it seamlessly supports other forms of existing or upcoming compression without rebuilding all the assets.
And of course, if we talk about lossless compression, PNG is lightyears ahead of DDS.