Right now I have 3 gig's of mp3's ...
3 gigs? How I long for those days... The good news is HDDs are about a buck a gig for ATA drives these days, and much less if you catch a good sale, S-ATA drives run about 1.50 a gig. HDDs and RAM are two things easily run in abundance.
And as everyone has mentioned, MPEG is a lossy compression algorithm; therefore, recompression is ill-advised, even if they are originally recorded in a high bitrate. The problem lies in the fact that you will have a very noticeable drop in resolution in the high end of the sound spectrum creating a muddy-sounding music file. If you encode originally at a bitrate of 256-320, it won't be quite as dramatic after recompression, but noticeable nontheless. Anything originally encoded at less then 256 will sound horrible and a source at 128 or less will give useless garbage that sounded like it was recorded in a train tunnel. Grab the source material and re-record if at all possible. Over the course of a CD you may save a few megs with OGG, but mileage may vary.
I haven't played with OGG files in about a year, but they were giving about a 10% advantage in file size, give or take a few kilobits. The main advantage to OGG is the fact it is a free standard, but things might have changed, the algorithm might be better than mp3 now -- I don't pretend to be a complete expert on this, and the topic is long debated.
The bottom line is this: you want good quality audio, you need more drive space to handle larger files. It's cheaper then a drunk prom date these days. I'm up to 160 GB and I know some of these guys probably have arrays close to a TB.