My blind test established that the difference between 128 and lossless, while there (at least for some people), is not large. So you saying that they sound *expletive* seems a bit of an overstatement.
As for the 64mp3 file, I think this is much different. I believe most of "hi-fi" is rather ridiculous, and that actually gains are minimal at best. But two firm things I believe are file types and headphones.
The jump from 64 to 128 is huge and anybody can tell it, especially with good headphones. Past that its a wash. The jump from crappy headphones to nice Sennheisers/Beyers/AKG/etc is also large and anyone could tell the difference. My own mother even says how great they sound when she hears them.
I have blind tested 5 different headphone amps and dacs (one of them being an ipod) and I was never in any test ever able to tell the difference, even with Sennheiser HD580. You really have to take what you hear at head-fi with a grain of salt because hi-fi is so easy to think you hear something that is not there.
But please, no 64kbps if you like good sound!
Edited by Crazy*Carl - 10/24/10 at 12:19pm