iPhoto was created to be everything to everyone in the consumer digital image storage, enhancement, publishing and viewing area.
Consequently, there are some quirks that appear strange. The "Originals" are saved images as they were when first downloaded. If you start manipulating your imported images, iPhoto will save and store the "original" in case you make a mistake or change your mind later. Use Edit - "Revert to Original" menu item.
iPhoto is great for organizing albums, making slide shows and making books...if that's your taste...maybe even for burning, getting Kodak prints, publishing to .Mac, etc.
Personally, I use Image Capture to download from camera and place the images in a folder. I then duplicate the folder and store/backup the originals.
I work on the copies in Photoshop and save the modified images before I import the folder or just a select few of the images to iPhoto.