Optimum compressed file for ipod/iphone?

dbpoweramp from my reading and personal experience is very well-regarded and will work just fine. I use it to rip CDs to FLAC lossless (uncompressed).

You most likely need lossy compression to limit file size. Aple AAC 256kbps (stereo) with variable bit rate (VBR) would give you results very close to original and much better than MP3 of the same size. You can use many programs to convert - I use free MAX (OSX). I just looked at typical 3 min song size (Beatles Ticket to Ride) and it is 2.9MB . It states 128kbps VBR but it might be for each channel (total 256kbps). So, it comes to about 1MB/min or 60MB for 60min CD compressing it about 10x since 60min uncompressed CD is about 600MB. FLAC and ALAC will give you only approx 2x compression. Hope it helps.