I think it depends on your approach more than anything else. I've had conversations such as "Music sounds so compressed, unlike my ten year old CD Walkman" to which my reply is "You do realise that your CD Walkman lossily compresses the music on the fly to make the music fit into the measly antiskip buffer, don't you?"
If you've had anything portable in the last, ooh, 15 years that isn't tape (and most of them sound pretty bad), then you've been probably listening to compression that's definitely worse than anything MP3 or AAC brings to the table, often without realising it. It's the psychology more than anything else, followed by the leaner, sharper sound that's typical of current music players.
If you're moving on from older equipment which more often than not had trebles that rolls off a little and in addition bass that's slightly boosted, then the iPod and suchlike may be a 'colder' experience. Much better absolute sound quality, but just not as 'warm' - and many people confuse quality for tone.
Sony's players have a pretty 'natural' tone with a pretty basic EQ which nevertheless works very well. It's probably your best bet to recreate sounds from older players, but Sony's lossless support is pretty pathetic.
The iPod, and some other well-regarded players along with it, generally sounds cooler. The difference between the iPod and other players though is that the EQ is essentially non-functional on the Apple player. The sound without EQ is generally very decent, and the convenience and completeness of syncing is what makes the iPod an excellent music system.
Pair it with a bass-boosted, treble-rolled head/earphone and you may think "I should have moved ages ago".
As for the material, I'd say rip in Lossless, and transcode to a more portable Lossy format such as MP3. This way, if you want to rip in another codec such as AAC or Ogg, you can do so without having to re-rip the CD each time.