Shooting in Raw or JPEG really depends on what you do with the photos after you take them. If just sending them off to facebook, or e-mailing them to freinds and family then shoot JPEG. If importing them to lightroom or photoshop to play around with whitebalance, exposure, color, or eliminating unwanted objects in the scene than RAW. Me, I always shoot in RAW. I can then always convert to JPEG if I need to but can't the other way around.
Choosing the lowest ISO while still allowing a correct exposure is always the best option. Unless you want the grainy look for artistic reasons. You can always choose auto and set the high limit so the camera can't choose a too high option.
As far as ISO noise reduction. I would leave it at normal. Choosing a high setting would reduce the sharpness of the photo. If you limit the camera from choosing a high ISO you really don't need the NR side of the coin.