I realise this thread was abandoned a while ago, but I thought I should point out a few things.
Firstly, FLAC is a wonderful format, but you won't get it on an iPod. iPods will only play MP3 files and Apple's propriety formats. There is, as you say however, the Apple Lossless Format. There's a catch here as well though - you can only produce Apple Lossless files with a Mac. If you have a PC, forget it - it's either AAC or MP3 for you!
Also, the iPod is technically rather inferior. As brilliant as it is for design, functionality, etc. it's been frequently stated that its sound quality isn't as good as other MP3 players. I'd suggest you look at makes such as iRiver (some of their players support FLAC and OGG), Rio and Creative.