I would think that decompressing while reading would be faster, but as Corion said, it depends. Usually bzip2 compresses text files very well so the IO load is much less if you don't write the decompressed text back to disk. If however you need to read the file several times or seek around in it, it may be worth writing it to disk. A gigabyte of text on a modern machine has a good chance of staying largely in the file system cache so reading it again is mostly at RAM speed.