I run AAC 256 VBR on my iPod most of the time (except for my gems) cuz I can't tell the difference under normal non-critical (flying, hotel, etc.) listening. I think the main difference is over a period of a couple hours or so...listener fatigue is much higher, at least with me, on good AAC stuff. But to me, you have the perfect lossy compression/quality ratio at 256 vbr and AAC over even the better LAME settings. Acoustic jazz (piano) shines the most critical light, IMO.