Let me echo the comments below but give you a bit more background, in case it helps. I've got 50-year-old ears, a big library, and I've spent a fair amount of time deciding on my compromise between sound quality and simplicity.
Lossless files (APE, FLAC, SHN, and others) take up lots of gigabytes of extra space compared to compressed formats like MP3 and WMA. There's no noticeable difference to my non-audiophile ears between a CD, a lossless file, and a high quality compressed format. Support for the lossless formats is not consistent yet; handheld devices and streaming around the house can be accomplished, but too often require a fair amount of attention to technical details and workarounds.
MP3s are truly universal, can be CD- or near-CD quality, and don't have any bits that can be used for DRM, as far as I know. MP3s can be played on all handhelds and streamed anywhere.
WMA is a perfectly nice format but it's designed for DRM, to lock down the ability to play certain files unless a license has been obtained. When you create a WMA file from a CD you own, there's probably no reason to be afraid that the file will be turned off because Microsoft goes insane, or recording industry armies invade Comcast and AT&T - but I prefer not worrying about it. And WMA files won't play on iPods.
A 192k mp3 file is near-CD quality. I have a perfectly nice home theater system and I couldn't tell the difference if I was blindfolded. Some people could.
There's good reason to create VBR MP3s, which use slightly more disk space but result in a significantly better quality file. It's CD quality for everyone but the purists. In Media Center, the setting is under Tools / Options / Encoding. Choose mp3 Encoder, click on Advanced, and choose Target Quality High or Extreme.
Good luck sorting it out!