QUOTE(xan2k1 @ Apr 6 2007, 13:34)

how does vbr differ from cbr? I know file sizes are smaller ...
Not with iTunes they aren't smaller - at least not necessarily. What seems to happen is that the iTunes encoder (which is, presumably, the Core Audio one) takes the nominal bitrate as a "floor". If the sound is complex enough to need it, the encoder bumps the bitrate up. You
can end up files that have an average bitrate slightly lower than the nominal bitrate, but not by much. They're more likely to end up with an average bitrate a little, on occasion a fair bit, higher.
QUOTE
vbr @ 160 kbps doesn't sound as good as a cbr @ 160 kbps, or are they "equal"?
No, it sounds better. With VBR set the resulting file will use more bits if necessary, where it needs to, and will therefore sound better. Whether the difference is audible to any given listener is another matter.
The iTunes encoder is a little lacking in flexibility, though. As you probably know, with some VBR encoders, e.g., the LAME MP3 encoder, there is no nominal bitrate. You select a quality level instead. The resulting average bitrate of the file can very quite a bit, because it depends on the characteristics of the track/s you're encoding. If you had some old mono recordings on a CD you were ripping then LAME might encode them at less than 100kbps; if you had some particularly demanding tracks to encode LAME might go up over 200kbps, and this is on the
same setting. The iTunes encoder is not like this at all.
It is using a more modern format, but it 's not using it very flexibly. Even if you use VBR, you're likely to end up with a files that have roughly the same average bitrate irrespective of the encoding demands of the track. So you stand to either waste bits where they're not needed, or on the other hand not have enough of them where you might. On your computer, this probably doesn't matter, because you can err on the large filesize and not worry about the wasted space. On a portable player, even though hard drive sizes have gone up over the last few years, you'll be losing hard drive space where there's less of it to spare. With higher bitrate files, you'll also be working your player harder than need be and, therefore, running down its battery faster than you need to.
If you're on Windows you might look at Nero's AAC encoder, too. I haven't used it myself: I'm a Mac guy. But you can set it to a quality level - the default is 0.5 - and I'd suspect it may well deliver you files that are better optimized for quality vs. filesize.