If you're very serious about preserving as much audio quality as possible (while obviously not storing the album in WAV format!), then you should use
Exact Audio Copy to rip the CDs to FLAC (CDex is nice, but doesn't match the accuracy EAC allows for). No question about it. And don't worry, the
iPod supports FLAC.
To set up EAC to be able to encode in FLAC, you'll need to first download the
FLAC encoder, then use
this tutorial to set up EAC to use it. When choosing an additional command line option to use (the tutorial gives you three to pick from), remember that more compression = less audio quality. Although, even the highest compression option will be much better than a 320kbps mp3.
This is assuming you're a PC user. If you're a Mac user, I unfortunately don't know which applications are best. FLAC is still the codec I'd recommend though.