Yes, that was my concern. It's not so much about the «tiny» (since the Sport may even work with 128 GB cards), but rather about a sound quality that's – although very good for the price – far from revealing or high-end. I'd say even if one is able to discern MP3 from Flac, it's questionable if the difference is relevant in any way. The MP3s on my FiiO X3 II or X5 II definitely sound much better than any Flac counterpart on the Sport ever will. That said, I do use Flac on both FiiOs.
Several years ago, before deciding on 256kbps mp3 as my standard for music files, I did several tests at different bitrates. I had trouble differentiating 256kbps mp3 from 320 kbps and the CD. 192 kbps sounded pleasant, however it seemed like something was missing in the highs. 128 kbps did not sound pleasant to me. Part of my decision to choose 256kbps was that there were no 32GB microSDHC cards then. If I was going to rip the CDs now, I would use 320 kbps mp3. I have the CDs handy so I could rerip them all, however it doesn't seem worth the effort.