Digital BW, The Print

By way of intro, I'm Linda McCarthy and decided to join this group 
because I've recently become interested in black and white photography. 
Seems that there are several Joe's in the know here to help fill in the 
blanks.

Two questions..
I understand there are two methods of shooting B&W with my camera- a 
Nikon D80; either by selecting the B&W option in the optimize image 
menu before shooting, or by converting already-shot color photos using 
the monochrome function in the retouch menu.  Have any of you 
experienced one as being the better choice over the other?

Also.. Looking for the best paper for printing and a good shop in case 
I need larger prints (I'm in San Diego).  I have an HP inkjet here, and 
I'm able to realize some above average results, I think..or, at least 
better than I thought possible.  My dream machine is an E Stylus Pro 
4800.  Hoping Santa may surprise me.

Thanks in Advance,
Linda