Like I said above, I find the quality of WMA fine, I reduced a load of mp3s (10 gigs worth) to about 5.5Gig .. and they dont sound bad (through headphones, or speakers) not much of this underwater sounding business.
As a rule you should never re-encode from one lossy format to another lossy format. It's like making a photocopy of a photocopy. Every time you do it, it gets worse.
WMA is generally accepted to be better than MP3, especially at lower bit rates. With AAC and OGG scoring the best on independent tests that I've seen.
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I use MP3's for music, no particular reason other than MusicMacth Jukebox defaults to it. 128 bitrate fits my listening needs.
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Bobby
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I like different standards for different things. WMA, in my opinion, has a superior compression schema, allowing it to get better quality at lower rates. However, it's also proprietary to Microsoft meaning that developers have to promise to give Bill Gates their firstborn children in order to use it in their programs (ever notice that practically no third party developers have the decoder for WMA built in?). So I mostly use MP3 because of its ubiquity.
I've heard some really good things about OGG, but unfortunately my CD/MP3 player doesn't support it, so I'm stuck in MP3 land.