I've got pretty good ears, as far as listening for imperfections goes, and I've found that the best - 192K (i think) AAC is perfectly fine. We have a good quality sound system at home, and mix CDs that I burn come out fine. Lossless is huge, especially since I only have the 60GB hard drive that I have in my PB, and 5 GB of space on my 1G iPod (if only the battery would die so I can get a new one).
I'd say 192 is the way to go.
MP