AAC vs MP3
You probably know that there are a number of audio formats in addition to MP3 that you can use to store music in (WMA, OGG, WAV etc etc). I've always been an advocate of sticking with plain old MP3, simply because it's the one standard that works with pretty much anything. But now I've discovered AAC, it should be just as open as MP3 and it sounds better than MP3 even at lower bit rates.
MP3 was originally designed to be the audio part of the MPEG1 video compression scheme. I have found that at bit rates of 192kbit/s and above the sound quality is really good. Only trouble is that at 192kbit/s my music collection takes up a lot more space on disk and more importantly on my iPod than I would like. Even with variable bit rate encoding (VBR) I still don't get anywhere near as many music files per MByte as Apple and others would suggest.
I noticed that Apple and a number of other players have started to support a format called AAC or Advance Audio Coding. I had assumed it was just another proprietary niche format until I discovered that AAC is actually the audio part of the latest MPEG2 and MPEG4 video compression schemes. This gives it a lot more credibility in my eyes. I have a encoded a few of my albums at 128 kbit/s using AAC and I have to say the results are impressive. At 128 kbit/s sound quality is great and the file size is 2/3 that of a 192kbit/s VBR MP3 file.
One thing that is a little unusual is that AAC files can have different file extensions. We're all used to mp3's being .mp3, but I've seen AAC files named a number of things (.aac, .m4a, .m4b). iTunes names files encoded as AAC as .m4a. iTunes also recognises .m4b files as being AAC files but with allows the contents to be bookmarkable which is very useful for long-ish content like audio books or spoken word.
I'm not about to try and re-encode all my music from MP3 to AAC but I think I will now use it for any new music I buy.
More info on this subject:
Apple on MPEG-4 Audio: AAC