Just insert the CD into the drive. If iTunes is setup as your CD music player, it will automatically launch and it should ask you if you want to import the CD. If iTunes is already open and it doesn't ask you if you want to import the CD, there's a button in the lower right corner that says "import CD", or something like that (I'm going from memory as I'm traveling and typing this on my business Dell laptop; no iTunes).
As for sound quality, that's a matter of opinion, but i typically rip at 128 and it sounds good to me.