I've seen a little about the new features in CS2, and I have a Question. Is it possible to take advantage of the things CS2 offers for Raw files if Raw files are not an option with my camera? I can save images as .tif or .jpg, and I understand that Raw offers more flexibility when processing an image. I guess what I'm asking is if a .tif file will open in Camera Raw. Hope I worded this correctly since I don't know much about CS2.

No, it has to be a Raw file, but I think (guess) that you could convert a TIF to DNG via the included converter (but the advantages are pretty minimal, as converting to TIF strips a lot of info).

Raw files are the "raw" unprocessed image as captured by the sensor in the camera. No white balance or correction of any kind has been applied.