This isn't hard, but going from one lossy format to another will give you the worst of both compression schemes.
I would strongly recommend that you re-rip the CDs and store them in a lossless format.
Harddrives are cheap and WAV is an easy format to use, but I've ripped all my CDs and stored the songs in FLAC format, which is a lossless format that yields a space saving of roughly 50% on average.
That way I get the best quality for archiving and for listening on the PC, and I can simply convert to whatever format is best supported by my portable player of choice at any given time.
IIRC, there are better sounding portable players than the iPod, but AFAIK it is among the better, and its scrollwheel is the best user interface of any of these players I've tried.
The new Nano looks very convenient.
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