MaximumPC decided to test out whether higher bit rates make for better MP3 sound quality. It seems that bit rate can make a difference, but allowing the bit rate to vary over the track that seems to be most important, not the absolute level

The summary of their results:

With the possible exception of the USB Key that survived a washing and drying cycle, no other Maximum PC Challenge has ever surprised us as much as this one. It’s downright humiliating, in fact, that in many cases, we were unable to tell the difference between an uncompressed track and one encoded at 160Kb/s, the bit rate most of us considered the absolute minimum acceptable for even portable players.

Some follow-up testing confirmed our suspicions: variable bit rate encoding makes a tremendous difference in the audio quality results, certainly enough to justify—many times over—the slight file size increase. Capping the bit rate at 160Kb/s in MP3 files can be pretty harsh on a track, but allowing the bit rate to wander upwards during more complex passages—as variable bit rate encoding does—and throttle down during quieter sections captures an astonishing amount of complexity while keeping file sizes down to an impressive minimum