Here's an analogy that I came up with while reading this thread:
When my wife is agitating me, or a person who feels a need to tell me how I can be a better driver like him, I'd rather hear it in 128kbps instead of FLAC. I still hear them,
but there's no reason to hear them in hi-def audio.
If I am listening to music that I love and that gives me gobs of insatiable joy, I'd rather hear it in Lossless FLAC or ALAC instead of 256 or 320kbps. When my
wife is telling me why she loves me and how great a lover I am, I don't want to miss one consonant, or any tonal imbalance that might stop me from getting
110% of what is being broadcast.
I might not be able to hear all of the benefits of the higher bit-rate, but if there's a chance I might miss one, that's one too many.
Yes, the difference between 320 and flac might be almost negligible to most of our ears, but when comparing a 8MB 320 kpbs file to a 80MB 1100 kbps file, there is ~ 10% more information available to our ears, which equates to a deeper fuller soundstage with more air between all of the instruments and vocals, and a larger dynamic range, with
more sustained cymbal hits and a bass curve that doesn't die out as quickly.
Do I need a Bugatti Veyron that does 0-60 in less than 3 seconds? No, but it's nice to know that you have car that can get on the highway from a stop in less than 6 seconds.
You might not need it when transporting a crystal ice sculpture, but you do need it when getting on the Long Island Expressway during rush hour, when people are being mean
and closing you out just because they get joy out of other's misery. Do I need 520 hp? No, but I do need unending power when passing a semi who, if I don't pass, means that
I will be stck behind him doing 35 the next 7 minutes pulling out the the rest area onto a highway of rush hour mean people who would swallow you up alive, if given the chance.
To sum it up, the difference between 320 and lossless is very small when using anything other than really hi-quality home or portable equipment. But, it is there. If you have the space and you have a player that handles lossless, why not have the best files that you can, for those times that it makes a difference.
On my iPhone, I have everything at 320, rather than ALAC because, the iPhone will never give me quality that I crave, on the go. But, on my iMod with a high end DAC/Amp add-on, hi-quality output wiring, and my UE-10's or JH-13's, then you can bet that I am only going to contain a lossless library.
YMMV!