Lossless is lossless. Any difference in sound quality is due to a mistake upstream.
Flac, ape, and alac (apple lossless) compress around 50%.
I use a squeezebox to lift the bits off the computer and then you get two choices: straight to DAC (best) and using the SB's own DAC, go with RCA interconnects into a preamp (or even an amp or powered speakers if you don't care about hifi).
The squeezebox interprets FLAC natively, the rest get converted on the fly (usually OK but it makes your computer system work harder).
I went with FLAC because it is an open standard and, twenty centuries from now, it should still be OK. :) Apple, otoh, can change its corporate mind tomorrow and then you may have to scramble a little bit (e.g., somewhere around v. 4, iTunes stopped reading flac files for no good reason and they've been bloody corposilent about why they did that).
Naturally, such concerns are amplified by a large integer when you let Bill Gates' outfit handle your file formats.
Ape is also somewhat open but not really. So the overwhelming majority of people have gone with flac, if they think about it at all (naturally, not if they just download from the Apple store!).
Whatever format you choose, you'll notice it is a lot easier to shuffle through your collection than having to get the plastic discs off your shelves.
