The really good news is that you can actually test for yourself relatively easy. All you need is a computer, foobar200 (media player) - with the abx plugin, and your headphones. Grab a CD that you know really well - and rip it to lossless (FLAC, WAV, ALAC - format doesn't really matter as long as it's well ripped as lossless). For ripping - I use EAC - free and accurate! Now with your lossless file, encode a copy to aac256 (I use aac256 cbr) - use constant or variable / try different bitrates - it's all learning about what you can hear.
Once you have the two files, load them in foobar2000 and use the abx tool to blind test the two files (one lossless and one lossy). Make sure you use the gain matching tool so that they are both the same volume level first! Try about 15-20 tests per file - and see if you can tell the difference. Because it's blind - there is no real danger of placebo. If the results show you can't tell the difference - don't be despondent - it's actually good to know your real limits.
When I first joined Head-fi - until I found out about foobar200s abx feature, I used to use lossless (ALAC) on my iPod, and I honestly thought I could tell a difference between most lossy formats and lossless. Turns out - through my own testing - that aac192 cbr is about my limit (I'm talking about properly ripped and encoded lossless and lossy files). So now - for my portable listening, I happily listen to 256aac cbr on my iPhone / iPod - content in the knowledge that for me there is no loss of fidelity. I went a step higher than I actually tested (256 vs 192) just for safety sake
. Now a lot more of my library fits on my portable. My Touch G4 is only 32Gb - but I currently have 240 full albums (3258 songs) on it with room for more. That's more than enough for me!
For home storage and listening - all my music is lossless. But that's just because I have plenty of disk space, and also because it gives me greater flexibility when re-encoding. A big no-no is reconverting lossy to another lossy format. Every time you convert, you lose a little bit of information in the compression. So I rip (EAC) all my CDs to FLAC, then re-encode those files (a copy) to 256aac for my portable. Best of both worlds.
The biggest thing is not to rely on what everyone else says. True enlightenment is finding out if YOU can hear the difference. I'd imagine if a lot more people on this forum actually tried true abx for themselves - with properly ripped music - there would be a lot less 'noise' on the occasional "can you spot the difference between 320mp3 and flac" thread (there will be some who genuinely can). It always amazes me the amount of posters who try the tests and then claim it is easy to spot the difference. In reality - quite a few of them are kidding no-one but themselves
.