The default file for saving in iTunes is AAC which at 128kps equates to about an mp3 encoded at 160kps. In the preferences (on the mac but might be called settings on a PC) you can set the "Importing" format from ACC to mp3, or AIFF, Apple Lossless or WAV. While this will encode new music into mp3, or whatever, it also changes the convert function, in the advanced menu, which allows music already imported into iTunes to be re-coded to another format.
My son uses a mp3 player and it shows up on the iTunes sidebar, just like a CD does, and on his iBook he keeps his music as mp3s which works really well for him. I use ACC in the forlorn hope of one day gatting an iPod.
