The iPod shuffle does play MP3 files, if that's what you mean by "convert". Using the same files and the same headphones, I don't expect you'd find much difference in sound quality. Apple generally gets good ratings for playback quality, but if you're using the standard little earbuds, your expectations can only be so high.
Converting MP3 files for the new iPod Shuffle
I have some MP3 files, recorded mostly at 224k bits/second, 48000 Hz, which I play on an iRock player. I'm thinking of getting the new iPod Shuffle player. Assuming that the iPod converts MP3 files, does anyone know if these MP3 files will sound better when played on the iPod shuffle (apart from any sonic differences due to different earphones on the two players)? Thanks.