Although some people will never notice a difference between 160kbps MP3 and anything better, why not use the best quality available? Space is less and less of an issue, even if you don't want to go with lossless. Also, if you rip in lossless to begin with you can recode it to lower qualities if you want to squeeze it onto a small iPod or something, plus you'll never need to use the actual CD again.
I find AAC to be superior to MP3, and I also find that 320 AAC with VBR works quite well for nearly everyone. My audiophile father was able to tell the difference from CD on his $10,000 worth of fantastic equipment, but it's very close.