That's fine if you all like lossy formats. Personally I'd prefer lossless formats. No loss of quality; no taxing of higher or lower frequency ranges or compromising on stereo space (headroom) in order to reduce file size.

eg: Apple Lossless format reduces files to much less than that of aiff or wav but still retains the same quality b/c it's a lossless format! iPod can play apple lossless format as can iTunes of course. (Lossy formats such as mp3 throw away info [just like jpeg] in order to reduce in size whereas the lossless formats don't throw anything away!)