If you have to upgrade, I believe Apple was forced for accounting purposes to charge something for giving you a higher quality product. Although my ears couldn't tell the difference between 128 and 256 kbps, I'd still do it for the following reasons.
1. Decouple your iTunes Library from DRM. You won't have to worry about authorizing computers. Probably a few DRM orphans will be missed but no big loss.
2. Higher bit rates. Better quality. m4a's are better than mp3's.
3. Ability to use with other Mac Software.
4. Ability to use with other devices (Zunes,

) . Either convert AAC, m4a's to mp3's or get devices that recognize m4a's.
5. A lot more devices now have incentive to recognize m4a's since there will be many more (billions) than m4p's. This is a firmware upgrade that will probably happen pretty quickly.
6. I think iPods and iPhones are the best but the lock in is done. More competition for devices, this will spur Apple as well to stay on top. Not that they are not already.