Some of this is correcting or expanding on what WMCoolmon wrote so be sure to read the responses from both of us...
2) All PCX textures used by the game are 8-bit files. For fonts they are read in as and used as 8-bit. For everything else they are converted to, and used as, 16-bit. The only exception is that if you use the -img2dds option then the PCX files are converted to 32-bit, then compressed and used as compressed DDS images. JPG files are 24-bit and used as 24-bit. TGA files are either 16-bit (if from Volition), 24-bit or 32-bit and are read and used in whatever the original format was. DDS files will retain their original format (16-bit, 24-bit, 32-bit, compressed, uncompressed) except in the case of 8-bit files. 8-bit DDS isn't fully supported yet but when it is it will be read as 8-bit but then converted to 16-bit for use by the video card. A compressed 32-bit DDS (DXT5) will use the same memory as an 8-bit PCX. A compressed 24-bit DDS (DXT1) will use even less memory.
3) You should always use DDS in order to have proper mipmaps. That's not a requirement, but is generally good, especially if you ever distribute those files. DDS offers many formats, from compressed formats which use less memory but with compression artifacts, to uncompressed formats which are available in 8-bit, 16-bit, 24-bit and 32-bit versions and will have the same quality as a PCX or TGA image. If you can't make use of a compressed DDS format then you can use an uncompressed DDS format. If you prefer it uncompressed but don't care about the game compressing it (with -img2dds) then use PCX, JPG or TGA. If the image is uncompressed DDS then even the -img2dds option won't touch it and it will never be compressed unless you conver the image yourself.