What's the fuzz about 16 bit?
See also my article about RAW mode. Basically, when you are working on a digital image, what you are doing is making lots of calculations - it may look like an image to you and it may look like you’re, say, increasing contrast, but to the computer it is just a big list of numbers and some mathematical formula it has to throw at it.
If you have 8 bits per color channel, each channel can take any of 256 values. This means that after every calculation, the computer rounds off to one of these 256 values - it is not the case that you can have immediate values - 255 divided by 2 becomes 127 or 128, not 127.5.
Needless to say, the more calculations ("image corrections") you make, the more rounding errors you accumulate and the farther the result will be from the intended result. 255 by 2 by 2 times 3 will not become 191.25 but 189. And you typically do lots of calculations...
With 16 bits per color channel, you simply have 65536 values to work with instead of 256. 256 times as many values. 65535 divided by 2, again, times 3 becomes 49149 instead of 49151.25. The absolute error still is 2.25, but the relative error is 256 times smaller so the visual end result will be much closer to what you intended.
That's why it is important to stay in 16 bits as much as possible. Sadly, most consumer level tools, as good as they may be (PaintShop Pro comes to mind), only will let you work in 8 bits. Because I'm a sort of quality weirdo - always hunting for it but never willing to spend the necessary cash - I found myself quickly on a quest for affordable 16 bit software, and if possible 16 bit software that knows a bit about color management.
The good news is: it exists, and you will end up with something that costs a third of PhotoShop CS and will probably deliver better results. Look here for the details.