edit in other than AVI

[Edit]

I just recently updated my system to 5.51. It seems that I no longer have to work with huge AVI files. Can I edit using the files I import in without converting them? My cameras are Panasonic HMC150 using SD cards giving me AVCHD files. Is the quality just as good as with AVI? Or, is it best to convert these files to another format? Any suggestions on the best file formats to edit from is appreciated. Mostly wedding and event videography indoors.