Yes, I do realize that 128kbps mp3's are shit, that's why I'm only talking about the better ripped or converted mp3 files. I have this one FLAC version of a song that sounds literally identical to it's mp3 version. So what's the point in having your entire music library in FLAC, consuming up all those gigabytes?
It depends how the music is mixed. In order to benefit from FLAC or the like, it has to have a lot of highs and lows in it. If it has a lot of (or if it is ALL) highs (as is often for shitty music today, because it makes it louder), you are not getting the full scale, and thus you won't gain much benefit from listening to it uncompressed. For things like classical music, many electronic musics, and "quieter" pop/rock (singery songwritery stuff, etc), you'll get the benefit, but only if you are listening loudly/closely enough.
Personally, I think people just like being leetheads about it. My optimal mp3 format is 256k vbr.