All modern games use compressed textures.
First, you can't make a game without mipmaps anymore. Really... you can't do that.
Ok, you don't really need DDS for that, but imho, it's the best way to handle them.
And if you use compressed maps, you can use the saved memory for high-res maps.
A 2048² DXT1 compressed map looks better than a 1024² uncompressed map. Or at least it can possibly look way better if the artist does a good job.
You should also realize that the next Media VP version will take up around 1 GB. (with the VP compression). And the biggest part are the textures and effects.
Now imagine we get normal mapping support. Those maps will add a considerable ammount of stuff for the gfx memory.
Sometimes you have to use uncompressed 24-bit maps. Mostly for some effects (not the animated ones).
16-Bit textures are not useful anymore though.
Look at the sample picture. The color banding in the16-bit effect is horrible.
Sure, the DDS one looks a bit grainy, but at least it can handle pretty much all colors and you don't have to worry about color palettes.
Imho the DDS one looks better. Especially because something will be behind it in the game.
A ship... a nebula, or an explosion. It will cover the grainy look.
The colorbanding can get even worse with something in the background.