Do I want to be ripping into iTunes using mp3 encoder or AAC encoder?
The short answer is that it probably doesn't matter.
If you ask 4 people you'll probably get 4 different answers even though it's a binary question. As far as quality is concerned, assuming you use a high-enough bitrate (I prefer 192 kbps but I've not done rigorous research) you probably won't be able to tell the difference between the two.
If you are concerned about file sizes AAC will generally create smaller files at the same bitrate but it depends upon many variables. The thing that confuses most people is that they think Protected AAC (what you get when you buy from iTunes) and AAC are the same thing. They're not. Although you'd never likely know the difference if all you used was iTunes and an iPod.
Essentially the answer comes down to this. You should probably keep ripping into the format that you have most of your songs in. The iPod will probably always play mp3 and AAC files but other players may not. Mp3 is a pretty safe bet (again at higher bitrates) because it's so entrenched that for at least the next decade all players will have to support it for backward compatibility reasons (just like Word 2007 has to be able to open Word 4 files). AAC probably won't go away either but its future is slightly less certain than mp3.
A good adage to adhere to when speculating upon the advance in technology is that the most general case will always win eventually because the hardware will catch up to it. So eventually we'll all be downloading our music in 70 megabyte per song lossless format created from the original master recording over our WiMAX connection and storing it on our 1 terabyte capacity iPods (but I'm betting those players will still know how to decode mp3's).