I used to use minidisk for theatre playback and, to my ears, the ATRAC compression they used was noticeably superior to a "typical" 128kbps MP3. However, the thing with MP3 is that you can choose your bit rate and once this goes up, the quality can get a lot closer to minidisk. Once you get above 192kbps the quality is definitely improving...and by 256 or 320 I'd wager it's comparable with minidisk/ATRAC.
Can you tell I'm not an MP3 fan? For a century or so, developments in recording were to improve quality--then along comes MP3 which is to improve quantity at the expense of quality. I seriously wonder, if computer memory and disks had been as cheap 15 years ago as they are now...would anyone have bothered with MP3?