The decision is between maximum quality for use on your SB (or
Transporter)and consumption of space on your iPod.  Since you are
posting in the Audiophiles section of the forum I am assuming you would
want to use some form of lossless compression for the files to be played
via the SB.  The problem then is that these are large files and as such
are not ideal for an iPod if you want to keep a large collection
available without lots of Smart Playlist shuffling.  For iTunes users
the only lossless format is Apple Lossless.  This will work on most
iPods but not on the Shuffle (you'd only get a small number of files
into the space there anyway so no real surprise).

If you want to keep lossless for the SB but have a more compressed
version for the iPod then you need to have two libraries and run the
second one in mp3.  Adam's reference to lame was regarding settings for
the mp3 encoder you could use.

iTunes 7 is supposed to support multiple libraries so that would allow
one for the SB in lossless and one for the iPod in compressed.  Since I
don't actually do this myself (all FLAC here) I am not sure of the
details of how this would best be managed.

davep


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davep
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