Adding to what xnor said...
Uncompressed formats like FLAC and WAV, Apple Lossless, also AIFF, have the ability to make an exact bit-for-bit copy of what's on the original CD, which makes them the most transparent. Anything that reduces the amount of data in the file (mp3, AAC) has the potential of being less transparent. It's a question of how much. For example, theres no reliable way to tell a 320Kb AAC file from the original, but a 64Kb MP3 will be obvious to just about everyone. Those are extremes, it gets pretty variable in the middle.
The advantage FLAC and Apple Lossless have over WAV and AIFF is they re-pack the data so the file is smaller but still bit-perfect.
The sampling frequency of a CD is 44.1KHz. The "bit depth", or number of bits per sample is 16. High resolution audio files are now available that go above that both in sampling frequency and bit depth. For example, 24bit, 96KHz (24/96). Theoretically those should sound better, but the difference depend on the original source material, how the files were made, and the quality of playback. It gives people a warm/fuzzy to have those high rate files, but the jury is still out on them being audibly better all the time. The best would be original material recorded at high rates and bit depths, but that means your favorite recordings from the 1990s won't be that, they'll be resampled, with questionable advantage. Playing 24/96 files (or higher) requires something a little special, both in terms of hardware and software. You won't play those on your iPod.