I knew someone would pipe in about that. Thought it'd be lovin though! He mentioned that once and Flac doesn't play on my USB reader on my Teac CD player. I tried that. AAC will only play from an Apple device on my Teac. I am using usb drives at the moment, although since the files are tagged, I will likely import them into my Ipod touch someday. I am pretty sure that the iPod software down-converts whatever you toss into the player, but I am just making an assumption. To compare, I just now put on an LP and a recording of the same album, Sam Phillip's "The Indescribable Wow" which is a very nicely recorded album. To me, the difference was very hard to detect if even at all switching from one to the other. I am leaning towards "no discernible difference". I use the highest bitrate possible, which I would think matters a lot. I remember when storage was more of a commodity and folks used 128 kbps. I can see how that bitrate would sound audibly worse than the original source. My recordings are pretty dang good at 320 kbps.
As I type, I am letting that album play from the USB drive and holy buckets, that is a beautiful recording!
Here's the album on youtube. Check it out! I did sound for her once back in the early 1980's, btw.