Just to add to the fun, .dds has an added benefit that I didn't see mentioned here-- unlike other formats, .dds has the ability to store textures compressed in memory, not just on disk. This can result in a considerable savings of graphic card RAM. Most .dds formats are lossy though, which requires some consideration and care. The .dds format is natively supported on graphics cards, which accounts for much of the speed given all that is happening. I'm not particularly advocating .dds, but it's worth considering for certain applications, especially where large numbers of textures are used for a similar task.
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