Does anyone know what the highest stereo audio quality is? The highest I can get it on windows media player is 192 kbps. The highest Rhapsody has is 320 kbps. I have no clue how high iTunes goes up to. Does anyone know if 320 kbps is the highest, or is there anything higher?

Technically, the highest quality is of course infinite :-)

Realistically, the highest consumer quality audio is uncompressed PCM audio from CDs: 1.44Mbps. That's 2x 16 bits, 44100 times a second. You can get higher quality from SACD and DVD-A media, but those haven't become common (yet? Will they ever?).

Compression can be lossless or lossy. Lossless, you can use FLAC, Monkey's audio, and Apple lossless: I think there is a FLAC decoder for the tablet somewhere. However, you won't typically get compression ratios much better than about 2:1 (so about 700 kbps).

Since out ears are imperfect, as is typically the reproduction hardware, we can compress the audio in such a way that a lot of information can be tossed without any perceptible loss; this is what all lossy compression is based on, from the 20-year old MPEG I Layer III (aka .mp3) to AAC, OGG, and enAAC+.

Most people will not be able to distinguish a 160 kbps AAC encoded file from the original CD data, given a good encoder, especially if the playback device is not reference-class. (Do your headphones cost more than twice your tablet?)

If you're archiving CDs, use FLAC, for use on the tablet (since memory card space is an important factor) use AAC. OGG can be used as well, but requires an extra decoder for the built-in media player IIRC.

Finally, it's a personal choice. Take a typical song, encode it at various bitrates until you can't distinguish from the CD.