Free Pandora streams at 128kbps, Pandora One streams at 192kbps - which is the highest any commercial streaming service goes (i.e. Rhapsody). There used to be a few that streamed at 256k, but recent legislation may have limited them all to max 192k.
And yes, it makes a difference - especially on good equipment. Cymbals are cleaner, voices are a little more natural, and you'll get fewer compression artifacts popping up in the middle of songs (can sound like a bird chirping or a momentary speed change as something falls out of key).