Unfortunately, MP3's utilize LOSSY compression, meaning the dynamic range and overall fidelity is compromised, in order to get SMALLER file sizes for storage. That's OK for background listening (car, iPod, kitchen, etc.), but not ideal for a high-end system.
File formats such as WAV, FLAC, ALAC, WMA lossless (and others), provide LOSSLESS "bit-perfect" reproduction of the recorded music, just as if you were playing the original CD.
The future of audio reproduction (video too) is rapidly evolving towards hard-disc and flash memory based digital formats, limited only by storage capacity, and downloading "bandwidth." However, the popularity of the iPod, and MP3 type files, is a double-edged sword. More people than ever are listening to music, but fewer are actually BUYING it, and the overall AUDIO QUALITY is diminishing. The future of high-end audio is at stake.
2006 will be the year that "music/media server" technology takes hold, with MP3's and iPods AAC format popular for casual listening, and LOSSLESS formats battling it out in the higher-end market. Unfortunately, proprietary format wars (a la VHS vs. Betamax) will dominate. That's why I've invested my time in ripping/saving all my digital music in FLAC format (lossless, bit-perfect, open-source, non-proprietary, with rapidly growing hardware support in the burgeoning "music server" market).
More info about FLAC here...
http://flac.sourceforge.net/index.html