I still have about 300 CD's I haven't bothered ripping, and I have a 500gb External drive for iTunes with only 100gb free.
I currently rip new CD's in either 320kbps MP3 if the CD is new age or electronic or pop, and ALAC if it is Live, Jazz, or has a lot of atmosphere and ambience that I don't want to get lost. I have to decide between 320kbps and ALAC because I like to use 8-16Gb ipods and not just my 80gb iMod, and 320kbps is more attractive with am 8gb nano LOD to amp. 99% of the time 320kbps is fine.
Once I get my 1Tb external drive, then I will rip two copies of new CD's, one in 320bps which means 10 CDs fit in a Gb on the ipod, and the other in ALAC for about 3 CD in 1GB. So, with both resolutions ripped it will about 4-5gb on the 1Tb drive for 10CD in both formats.
So the extra 500gb will hold about 1000 CD, and the other 500gb is for my movies and TV shows, and that should last for a while before I buy another drive. I have over 200gb of movies, and many of them I have ripped from DVD in three sizes 320x240 (239mb), 480x208 (475mb 500kbps), and 720x480 (1.5gb 1800kbps), and another 550 TV shows (including the free ones iTunes gives out each week)