@Dagobah -
There are several formats that are lossless, i.e. no loss of sound occurs from the original file. This includes wave files, flac files, and apple lossless files.
Then there are formats that remove sound information, generally in the can't be heard ranges, such as mp3. mp3s can be encoded at different bit rates, and the higher they are the better quality they are. The highest standard rate that an mp3 can be encoded at is 320kbps due to limitations of the format. A bit rate at 256kbps is going to be very similar, being the next rate down. Especially if it's a variable bit rate encode, which may be higher in places, and lower in others, but overall comes out around 256kbps.
You can set what rates you import your music from CD. If you are in iTunes go to "Edit" and then to "Preferences" on the menu, and you'll see an area where it sayd "When you insert a CD" with a button beside it that says "Import Settings":
This will allow you to pick between formats:
It has two compressed options:
AAC Encoder (High Quality 128, iTunes Plus 256, Spoken 64)
mp3 Encoder (Good Quality 128, High Quality 160, Higher Quality 192, Custom)
And three lossless options:
AIFF Encoder
Apple Lossless Encoder
WAV Encoder
On the two compressed options it gives you a range of options that you can choose between. For AAC files for instance you can import at "High Quality" or 128kbps, or "iTunes Plus" quality at 256kbps. If you go into mp3 they give you a number of options as well but you will have to go into custom settings if you want to choose 256 or 320kbps.
Yes the files are better quality as you go to the higher settings. The ultimate quality is to import your whole collection using a lossless format, then there is no sound information lost. However before doing so I recommend you consider the size of the files you are generating. An mp3 at 128kbps is half the size as one at 256kbps. And an mp3 at 128kbps is 1/11 the same song in an uncompressed wave format. So you will gain in sound quality, but you quickly lose storage space.
Me personally? I do have the entire U2 collection ripped in a lossless format. And I have a few other artists where I prefer having everything in loss less (The Smiths, Depeche Mode, Gavin Friday, New Order / Joy Division). But I rarely listen to the lossless formats, I use it generally for back up in case anything should happen to the original CDs. Because I also maintain a collection in compressed mp3 format at 256kbps for use on my phone / mp3 player / general listening around the home. The uncompressed wav files are much too big to store much on a phone, so I prefer the smaller compressed formats for use there. I can store about 5x as much music in 256kbps mp3 as I can in an uncompressed format. I personally do not use iTunes match, as I was worried about it getting confused by remixes or names that were slightly off, and I just decided for me that it was not worth it - as I have a well managed collection right now.
If you have the CDs you can import at any quality you like. The directions are above if you want to import at a higher bit rate.
The most common mp3 settings you'll find are 128, 192, 256, 320, although there are others, and the higher the number, generally the better the quality if they come from the same source.
