Neo-be, i don't think that iPod's will ever support Ogg/Vorbis, the format you are referring to (Ogg is just a container). I used to be a Vorbis advocate, but, after buying a PSP, which didn't support vorbis, and later the iPod, which neither does that, i had to move to MP3. I recommend you to use the LAME flags -h --vbr-new -V 0 -q 0 to achieve the greatest quality possible. I think this is better than the 320kbps CBR because it will discard the parts of a track that do not need that amount of info. If you are bothered about the iPod support for ogg/vorbis, consider getting the Rockbox iPod firmware, an opensource project that will turn your ipod into a linux handheld, with a better interface, and FLAC support as well as GameBoy emulation 🙂. However, i prefer the apple firmware, as it doesn't drain the battery so much as Rockbox. You can give it a try:
http://www.rockbox.org (look for the iPod port). Good luck!