just a note on the dds format. it stands for 'direct draw surface' and photoshop can load this format.
for a more tech explanation:
A surface, or DirectDrawSurface object, represents a linear area of display memory. A surface usually resides in the display memory of the display card, although surfaces can exist in system memory. Unless specifically instructed otherwise during the creation of the DirectDrawSurface object, DirectDraw object will put the DirectDrawSurface object wherever the best performance can be achieved given the requested capabilities. DirectDrawSurface objects can take advantage of specialized processors on display cards, not only to perform certain tasks faster, but to perform some tasks in parallel with the system CPU.