In camera, or post-production?
Recently in a flickr discussion forum, the issues of in-camera processing came up. LotF, the photographer in question, was disappointed at the results his new camera was producing, with in-camera b & w conversions, compared to an older camera. Some argued that it was the camera, or maybe the camera's software. Others also wondered out loud about the pro and cons of in camera conversion and post production conversion.
I am a fan of being aware of and able to control outcomes to meet my expectations, this is something any software that is fully automatic will lock the user out of entirely. Therefore I tend to avoid in-camera processing, besides it's almost impossible to make good judgments on a screen that small.
So, for me the only way to convert is in post-production. I did however conduct a small simple test, one shot as usual and then the same shot with the camera set to b&w*
I used Photoshop's black and white conversion on the default settings. The results indicated to me that post was indeed better. Subtle but better. [The in-camera shot for comparison.] The highlights were over-exposed, the shadows and mid-tones were ok though, I guess if you had the software to run a jpeg through a raw conversion tool, you could fix up some of the problem areas and blend them together.

This in camera processed shot, has blown highlights and poor mid tone separation, the contrast seems to high too for my liking.

Post processed has more values to work with, the shadows reading #3, are little empty for my liking though, easy fixed with some tweaking in Photoshop.
*This has all been done using phone cameras for speed and convenience.