In iTunes 8 on my iMac, I noticed that items I recorded myself had the contextual menu option "Create AAC Version." In the older version of iTunes on my eMac, the menu option was "Convert Selection to MP3." I actually prefer the AAC version because of its smaller file size, so I lugged my eMac into the other room, connected it to the Internet, and updated iTunes to version 8. But when I looked in iTunes on my eMac, it STILL only gave the option to convert to MP3! Why the difference between the two Macs? Is it because of the different processors?
No. The create XXX version is controlled by the import settings you set in iTunes -> Preferences -> General -> Import Settings button. Whatever option you set in import settings is also reflected in the Create XXX version menu item. If you select to import AAC, your menu would read Create AAC version. If you select to import MP3, it would read Create MP3 Version.