I have most of my music files in AAC. They tend to be smaller and better for users with small hard drives(so you music does not take up all the space). I feel that they give better sound quality when ripping right from cd. On the other hand since you would convert your lower quality mp3's to aac's the sound quality would not change. But overall it will take up less space.
There would be a downgrade in quality if you go from MP3 to M4A(AAC) but I found if my MP3 is at a high enough bit rate converting it to AAC wouldn't be bad at all...but don't expect to be able to convert it again.
Actually, converting MP3s to AAC will likely DECREASE the quality, when I did it it was very noticeable and I am not an audiophile by any stretch of the imagination.
The reason the quality will decrease is because both formats remove information from the audio but the information is thought to be very hard for humans to hear, so you get smaller files but without much of a drop in quality as you couldn't hear what was removed even if it was there. However, both formats remove different data, so when you have an MP3 it's missing data from the original recording and it isn't that big a deal but when you convert that to AAC you will loose even more of the data and it's when that happens that the removed data becomes very obvious. One way to get round it may be to convert it to a high bit rate AAC but then that would totally defeat the purpose of trying to save space.
converting mp3s into aac files is like making a photocopy of a photocopy. even if you've just bought the most awesome, cutting edge photocopy machine, the best copy you could make still wouldn't be any better (and will likely be worse) than the first photocopy. and forget about getting a copy that's close to the original. mp3s and aacs are great but, they should only be encoded from the original source. so get those cds and re-rip them to the aac format.