I convert .flac to Applelossless files on my computer and have successfully synced/played them on my iPhone. Sound quality is around 800~1411(I believe the highest I have is around 1500) kbps and on average take 20 mb of space for each song. I have found recently that multitasking with my iPhone has become more troublesome, not sure whether from the album art, large amount of music, large file size, or a mixture of the above. But using and playing the files have no lag what so ever. While the large files are unappreciated on the headphones most people buy, having a decent audio system will easily show the difference and on better headphones, spacial quality and clarity is definitely improved.