Hello Ranthore.
To start off, MP3's are smaller in size than CD audio tracks because they are compressed. When you compress things, you lose quality.. in this case sound quality, or more specifically dynamic range.
You can offset this somewhat by encoding your MP3's in a higher bit rate, with the highest possible being 320 KBPS. The average a few years ago was 128 KBPS, but keep in mind even at 320 KBPS you are still compressing the file.
That being said, in my opinion it more comes down to the quality of system your going to pair your music with. If you going to drop the $$$$ on a full range audio system that has high fidelity than you should just drop the extra little bit on a CD player.
In a car maybe, or on a iPod dock or just a bedroom stereo, are you really doing critical listening? My guess would be no. Even in your car, with wind and road noise making your noise floor much higher than it would be in a normal room it is hard to really appreciate the subtle nuances of a song reproduced faithfully on a CD.
Just on a side note, I don't know how many CD's you have, but I would go more than a 50 changer. Sony makes a 400 CD carousel now. I have the 300 disc version and aside from being a little slow swapping discs it works great. The point with a multi disc changer is so you don't have to handle and change your media all the time. 50 will still leave you doing that consistently.
And your friend is right, you can make group lists, playlists, anything you want.
Good luck.