While I understand listening to a lower bitrate and sound quality can put a damper on the enjoyment (radio stations) ; I have just tested Simplify with the same song streamed from my mac at home & the same file that is already stored on my iPhone.
While I don't know much about the compression used to stream audio files on a 3G network, I have noticed no change in sound quality. To my ears, it works wonders.
With only a 5 second buffer. <- and that I will not complain about.
What is the bitrate of the file? How was it ripped? What headphones do you use, the stock earbuds? They are terrible.
I listen to MP3 that is LANE encoded with APX presets, it results in a VBR file averaging usually 220-280 kbps. Even then I can tell the difference between that and an uncompressed file from the same CD.