MP3s are great because of their smaller file size as they are compressed files.
If you have an expensive system in your car, for the best sound quality, use CDs(original). 320 is more than sufficient for every day listening in your car.
if you want to play flac in your car, the way i do it is using my droid phone and aux cable using a third party music player Meridian. Keep in mind that HU in the market do not supprt flac because it's processor intesive, meaning it costs more for them to make a HU with FLAC support. Nonetheless, i think we'll see HU's with FLAC support in the very near future. FlAC, i think is an open source so i think companies could work something out to make it work.