Yup, Pianoman has laid it out pretty well. The only thing I'd add is that streaming audio is usually MP3 between 64 and 128 kbps.
You might want to just rip a few CD tracks and listen (blind, if possible, with a friend picking the tracks) to see what you think. My personal sense of how various bitrates sound is as follows (your results may vary, of course):
64 kbps MP3 -- really nasty, lots of artifacts
96 kbps MP3 -- still kind of nasty, but fine for background music while I'm working on something else
128 kbps MP3 -- still a lot of artifacts, but acceptable as long as I'm not being too critical
128 kbps AAC -- some artifacts, but unless I'm listening closely for them I can't hear them
160 kbps AAC -- a lot fewer artifacts, extremely hard to distinguish from the original CD except for certain very demanding types of music (e.g. classical)
192 kbps AAC -- extremely hard and maybe impossible to distinguish from the original CD
256 kbps AAC and higher -- impossible to distinguish from the original CD