A couple quick basics just to help clarify some things:
Bitrate is a measure of how many bits of information are being processed per second. For iTunes Store AAC files, that rate is 256 kilobits/sec. (kbps). That rate depends on three factors:
1) Bit depth of the original recording (either 16 or 24)
2) Sample rate of the original recording (from 44.1 kHz to 192 kHz)
3) Compression ratio of the file format (if any)
All CDs are in what's called "Redbook" format. This means the bit depth is 16, and the sampling rate is 44.1 kHz. Uncompressed, that is a bitrate of 4411.2 kbps for a PCM stereo recording. Obviously, to reduce that rate to a mere 256 kbps, you have to throw away a A LOT of the original recorded information. That's what lossy compression is -- you lose information. Now, in theory, AACs and MP3s use complex compression algorithms based on psycho-acoustic principles so that the information that is lost doesn't affect how the listener perceives the sound of the music (again -- in theory). On a relatively low resolution sound system, the differences are not that noticeable. If you have a high res system, however, all compressed formats tend to sound tinny, often harsh, lacking in warmth, have a constricted dynamic range, and much smaller sense of space. My personal opinion as that AACs sound better than MP3s at the same bitrates.
Consider also that many digital recordings were recorded at bitrates higher than Redbook format. Most (if not all) digital is recorded at 24 bits and at least 48 kHz. Many audiophile recordings use sample rates upwards to 192 kHz. For my audiophile downloads at 24 bits 96 kHz, the bit rate is 4608 kbps. When you consider that some of your recordings started life at that bitrate, and then were pinched down to 16 bits, 44.1 kHz, squeezing them down even further to 256 kbps just saps the life out of them.
So, it really depends on your ear and your system. If you wish to be sure you are preserving the full range of recorded sound heard on the CD, go with a WAV, AIFF, or Apple Lossless (which will save space, but without actually removing any information -- just compacting it for storage). Experiment by ripping a CD, encoding one file lossless, and another in a lossy format such as an AAC or MP3. If you hear no difference, well then you can get away with lossy formats. Note, however: if you upgrade your system down the road to the point where you can hear the difference, remember you will have to re-rip your collection. Once you rip a CD and compress it into AAC or MP3 format, you can't go back.
BTW -- for the best resource on the net regarding computer audio, check out this site. They are also very pro Mac over there, so you can get a lot of great advice:
http://www.computeraudiophile.com/
Cheers,
Steve
Message was edited by: serdikoff