I won't accept anything less than FLAC, although this is mostly because most records have troutty mastering and I remaster them. I can't tell a difference between well-encoded 320kbps (i.e. no cutoff at 16.5 kHz like old mp3 encoding would do) and FLAC, but I can tell a difference between music that has been lossy encoded twice and music that has been lossy encoded once. Also 320kbps uses up way too much space on my iPod.