Here’s a direct quote from Evan Cornog’s Slate article, Portable Audio for Snobs:

Even using lossless files, none of the players sounded quite as good to me as the same music on CD played on a $50 Discman. But portable audio has to involve trade-offs, after all. Given the limited disk space of all these players, a lossless format is a reasonable compromise between low-quality, small MP3s and uncompressed files. If you value sound quality over convenience, buy a $50 CD player and take the money you saved to buy better headphones and a headphone amp.

Lets have a laugh and read that again: Given the limited disk space of all these players, a lossless format is a reasonable compromise between low-quality, small MP3s and uncompressed files. So, how are the bits different between an uncompressed file and a losslessly compressed file? (But the quads, man. It needs more quads.)