iPod help needed...

Well, Ketchup, there IS no loss in quality. See John Atkinson's measuremenst in one of the recent STEREOPHILEs!
Audiofankj - I have the same pod and I can tell you that there is space space space even after having imported the comlete Schostakowitch, the complete Schubert chamber music, the complete Beatles, Pink Floyd and Van Morison let alone the complete Brahms symphonies et al.
All encoded in Apple Lossless which works without loss really. With the proper headphones (Sennheiser 600er in my case) it's pure joy to use the iPod.
A hint: check the net for "Podworks" to enable you to copy stuff FROM the pod TO your comp, which is vitally important if you have more than one Mac or PC or at least different hard disks. I also like this feature because I want to store away stuff from the iPod for future use.
Good luck!

Why not do a little experiment yourself and see what you like best. You can upload the same tracks encoded in different formats to iPod at the same time and listen to the differences in sound quality. Personally, through a pair of HD-650, I could not hear any difference between WAV, Apple Lossless, and MP3 VBR at 320bps. But I have a pair of old ears also, you might experience differently.

Think hard, and perhaps experiment, with your intended purpose. I've been a serious audiophile for several decades so I was real worried about getting an iPod mini and using digital at all, let alone compression! Then do I need to drop $300 on better headphones, do I need a headphone amp.... But hey it turns out I use my iPod mini 90% of the time on a cardio machine, where I want something with a BEAT that is DYNAMIC and portrays the EMOTIONAL content of the music. I find that the default Apple AAC format at default rate (128 I think) along with a cheap pair of headphones is fantastic! I tried a more expensive head phone (shall remain nameless) and it was better in every audiophile way (sweet extended highs, better bass, etc) but not nearly as much fun or inspiring as the cheap pair. So consider carefully your intended application!

I agree with Artmaltman... consider your needs.

If lossless is really important, than I'd suggest creating playlists, and managing your CD collection manually. Do you really need access to all 110 CDs at once? Put on as much as you can, and change it up as needed. iTunes is a great management tool for your digital music.

Also, can't remember where I saw it but the 128-bit AAC is actually supposed to sound superior to higher bit-rate AAC.

Thanks for all of the responses. I posted the questions just after I received the iPod... easier to ask than read the maual, eh? :) Anyhow, I didn't realize you can load many albums into iTunes and then "select" which artists, playlists, etc. to load onto the iPod. Very nice. Also, it seems even with lossless format I will be able to fit about 1,400 songs. That should be quite enough, knowing I can cycle through various artists from the iTunes database I have loaded onto the computer.

I am still trying to compare the AAC versus the Lossless format...

has anyone else tried Grado SR-325's on an iPod yet? *grin* you are in for a treat!