Using decent headphones and even on moderate sound systems you can tell the difference between 128 and 256 and 320. Good recordings show even more quality and depth with better bitrate conversions.
I would recommend 256 as the minimum - if you can, 320 VBR. Not sure if Itunes will do that itself. You may need to get a separate MP3 ripper (LAME MP3 codec) and create your own - then import into itunes. Its worth the extra effort, IMHO.
MP3's playing in the M3 that were ripped at 128 sound metallic and a little tinny.
Higher bitrate ones sound great.
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