Depends on what you intend to play the files on to be honest.
For future-proofing and best sound quality you are best ripping your CDs in a lossless format. Examples of these with pros and cons are below (all are lossless so qound quality will be identical):
WAV - (+) highest level of compatibility - pretty much everything plays them. (-) Large files so lots of storage needed (~700Mb per CD), (-) No real ability to 'tag' the files with artist information and album art etc.
Apple Lossless - (+) Improved filesizes (~400Mb per CD), (+) can tag files, (-) Compatible with ipods only pretty much
WMA Lossless - (+) again good compromise between sound quality and filesize (~400Mb per CD), (+) allows tagging, (-) not as widely compatible as WAV, (-) I belive incompatible with iPods
FLAC - (+) ~400Mb per CD, (+) allows tagging, (+) open-source codec so technically not tied to Microsoft or Apple, (-) few portable players use this format (though probably not an issue, see below).
All of the above lossless formats will give you CD perfect sound on a system that can play the format. I use FLAC as this is supported by the Squeezebox I use at home.
Ripping in lossless also lets you transcribe the files to any other format that you might need for portable players. E.g. if you are using FLAC at home but want mp3 files for your portable player for storage and compatibility reasons then you can simply create a copy in mp3 format without having to re-rip the original CD.
The only disadvantage to these formats is the lack of compression and hence large file sizes when compared to lossy formats such as mp3, aac or wma (see below).
If filesizes are an issue and for use on portable players (unless you have a 160Gb classic) then you will probably need to use lossy formats. The most common are listed below:
mp3 - the original and still the best (?!)- (+) widely compatible, everything plays mp3 files, (+) supports tagging, (+) at high-bit-rates (256Kbs and above) the sound is as good as or better than othert lossy formats, (-) at lower bit rates some people would argue that newer formats such as aac or wma sound better.
aac - apples format, used by iPods etc. (+) better sound than mp3 at low bitrates potentially, (+) allows tagging, (-) best support for iPods, (-) not as widely compatible with non-apple products.
wma - microsoft's format. (+) better sound than mp3 at low bitrates potentially, (+) allows tagging, (-) non compatible with iPods
My advice, and the approach that I have taken is as follows:
1) Rip all CDs in a lossless format (I use and recommend FLAC) as storage is so cheap these days and you don't ever want to have to go back and re-rip your CDs. I rip CDs using EAC which is highly recommended.
2) Use the lossless files where you can and for playing on home hifi etc
3) Maintain a second copy of the music library transcoded into a lossy format for use on portable players where compatibility and file size is an issue (I have everything copied as 320Kbps mp3 files). I use Mediamonkey to manage and transcode the files.
The only disadvantage of the above is that you need lots of storage (~5-600Mb for each CD, 400Mb for lossless plus 150Mb for lossy). Storage is so cheap that this shouldn't be an issue and is more that worth it in the long-run (speaking from experience of re-ripping 400+ albums having originally recorded everything in 192kbps mp3).
Ogg is another good lossy format, a lot of the good korean players use this format (Iriver, Cowon, etc) instead of AAC. It is another free open source codec which means it is widely supported and free from any company. The sound is roughly comparable with AAC for a given bit rate, but the 2 formats compress the audio differently and therefore have slightly different qualities, so listen to both and decide which you think is best.
AAC and OGG should be better than MP3 at any given bitrate on decent playback equipment. They are much more sophisticated and retain far more of the audio spectrum. No matter what bit rate you use MP3 at it always throws away pretty much all frequencies above about 16kHz - 18kHz. AAC and OGG on the other hand sound very good at high bit rates for lossy formats, and reasonable at mid range bit rates.
Also, FLAC is now supported by quite a few portable players since it is computationally very easy to decode meaning that the player doesn't need a powerful DSP to decode it, and also saving substantially on battery. Rip your CDs into this format to store on your computer as described above, or if you don't have the space to store all your CDs on your computer in FLAC, then just burn the FLAC files to a DVD or CD and just store the lossy files (ogg, aac, mp3 etc) on the computer, that way you won't have to re-rip and re-tag the original CD in the future, you can just convert the FLACs