DDS is a compressed texture where TGA is not. Uncompressed a DDS texture uses the same amount of memory as a TGA texture. However, DDS is a lot more efficient than TGA. DDS uses mip maps where a TGA does not. TGA "looks" better, and is a better quality texture, but TGA is OLD technology (vintage 1989). Here is a full summery on TGA format http://www.fileformat.info/format/tga/egff.htm. Here is a summery of DDS format for comparison. http://en.wikipedia.org/wiki/DirectDraw_Surface
When you convert TGA to DDS the DDS texture will suffer some loss in quality. The average person will not notice this loss, but really nit picky people will notice a difference, and even i noticed the loss in quality when it was pointed out to me.
DDS is a smaller texture size "stored" than TGA, because it is a compressed texture.
The main benefit IMO for DDS format are the Mip Maps. Which is also the main reason why we used all DDS format in TSOP. The majority of Sins particle textures are in TGA format. TGA format does not scale down when you change graphics options. TGA remains the same resolution no matter if you chose high, medium, or low settings. TGA will use the same "video memory" if you chose high, medium, or low settings.
DDS on the other hand WILL scale down using the graphic options, or just by zooming out. The mip maps act as level of detail textures when you zoom out. Increasing your Graphic Performance. It works even with the particles. Particle textures in DDS format WILL scale down with the options and by zooming just as the ship textures do. When we replaced the TGA textures in TSOP with DDS textures there was a tremendous increase in "graphic performance".
The major RAM savings happened in TSOP when we "strategically" reduced the resolution of some of the particle textures. IMO there was absolutely no reason for a particle seen in game as no more than a "dot", or a "blob" to have a 256, or 512 resolution texture. So we reduced those big textures by half, or more. It all depended on how it looked in game. The goal with TSOP was to make it look like nothing was changed at all. If there was a major visual difference in game then we left that particular texture alone, but still converted it to DDS format. THAT is where the real ram savings came from in TSOP. Plus reducing the resolution of the starbase, fighter, mine, construction, and trade ship textures.
The whole point of TSOP was to help prevent Original Sins, Entrenchment, and later Diplomacy from hitting the 2 gig brick wall. We must have done some things right. The dev's incorporated some of TSOP into the latest Diplomacy patches, and are using some "TSOP Like" optimizations in Rebellion (like removing the top mip levels on small ships).