Has anybody noticed that when you select this option, iTunes only leaves like 5MB or free space on your iPhone, as opposed to about 300MB of free space.
This sucks because taking a couple pictures will fill up the free space or trying to download/update apps isn't possible.
FIX THIS APPLE! ALLOW ME TO CONVERT MY MUSIC TOO 128KBPS WHILE LEAVING 300MB OF FREE SPACE ON MY IPHONE!