That's the beauty of the iPod..you don't have to store anything as an mp3 file. I have over 25 hours of tunes on mine and all are stored as Apple lossless files. They are compressed but lossless. If you want you can store AIFF or WAV files (both uncompressed), these will be larger files and the battery will wear drive down faster because the hard drive must be spun many more times, but it sounds as good as a cd (which is of course a AIFF file anyway.
Steve
Steve