Is the lossless on just for home use or on the iPod too? Because I can't imagine a scenario where a lossy file wouldn't sound the same as a lossless in everyday listening, like on a plane, bus, in a car, etc.
Unless you're listening in a room with dead silence and concentrating intensely on every split-second of audio, and then assuming you can even tell a difference, and the earbuds are in the several hundred dollar range, then it's probably best to just go with lossy over lossless.