It all depends on how much you value your drive space and how much music you hold. I like to grab things at 320VBR. My brother refuses to use anything but Apple lossless encoding. Most of all it depends on whether you, personally, can tell the difference with your best set of headphones/speakers.
depends on the stereo equipment youre using, and the type of music youre listening to. generally, theres a big difference between 128 and 190, but once youre at 190 and are thinking of encoding even higher, you have to be an audiophile with a bionic ear and a really, really good stereo to really pick the difference. ive found that acoustic stuff and vocals suffer most at low compression...but that could just be me
I mostly use Sony MDR-V700 headphones with an iPod and it's the clearest sound I could hope for.
If I'm just loading up my Creative Labs 256meg jobby for a gym visit I sometimes re-encode my mp3s to lower quality since I can fit more on the thing and I won't be able to tell the difference over the gym noise.