Apple's iTunes News has posted up a helpful tip on how to use the new automatic 128 kpps downsampling function in iTunes to squeeze double the music (if lower quality) onto your iPhone, iPod touch, or iPad.
Audiophiles will no doubt rather scratch their ears out than listen to anything that highly compressed, but if your ears are more greedy than golden, the 128 kbps downsampling might just be for you.
You can find it when you plug your iPhone, iPod touch, or iPad into iTunes over USB, on the general screen that comes up. (See screenshot, above). Here are the extra-geeky details:
The bit rate for iTunes Plus (which is the format used for all music from the iTunes Store) is 256kbps (kilobits per second), and that's also the default for the Import Settings used when you rip CDs. It provides excellent sound quality through most any playback system. However, for many people 128 kbps provides very, very good quality itself and may be acceptable for most situations. Your ear, taste, and how and where you listen to the music matter at least as much as the bit rate. If you're feeling squeezed for space on one of your devices, select this option to fit in twice as many iTunes Plus songs. The music on your computer won't be altered in any way and you can always switch back to 256kbps (or higher if you've ripped music at a custom bit rate) by unchecking the option the next time you sync.
I tried it but ultimately switched back to the regular mode. I couldn't really tell the difference, but I didn't sync
[Apple iTunes News]