Lincoln Spector of PC World did a quick and dirty study that indicates people (including music pros) can barely tell the difference between uncompressed and compressed audio files.

Curiously enough, the author mentions another more scientific study, which indicates that young people coming up with MP3s as the primary format actually prefer it:

[T]he students he tested like the "sizzle" or metallic sound that the format imparts.

Not unlike the preference for the warmth and crackle of vinyl, eh?

Here's the full article.