Marco.org

This iPhone/iPod sync option is new to a recent version of iTunes. It’s incredibly useful and helps cram a lot more music into a device’s limited space, especially if you have a lot of high-bitrate songs.

There are only three annoying issues:

1. The first time a song is copied to a device, it transcodes it, which makes initial syncs with new music very slow.
2. The downsampled files aren’t stored anywhere on your hard drive, so if you sync more than one device, it needs to transcode the songs again for each one. And if you perform a restore on a device, the first sync takes forever as it transcodes all of the music again. This may be the lesser of two evils: the other option, storing a 128 kbps copy of a lot of your music on your hard drive, is probably less desirable to most Mac users since they’re likely to be using a laptop with limited disk space. But repeated transcodings are made more annoying because:
3. The CPU-bound transcoding process is single-threaded, even though Apple hasn’t sold a single-core computer since 2006. A restructuring of the transcoding code to be multithreaded would make this process 2 or 4 times faster for nearly every Mac owner (and 4 or 8 times faster for most Mac Pro owners).

I’ve enabled this feature for everything I sync, despite the downsides, because it makes such a big difference in space for my library (much of which was purchased at 256 kbps or ripped from CDs at high bitrates).

There’s technically a quality hit, but I have yet to notice it with any compact headphones, and you definitely wouldn’t notice it with earbuds.