mike,
Mp3's vary in their quality dependant on what resolution they are burned in. You typically can burn a song from a resolution of 16kps to about 320 kbs, with I think 128 being CD quality. The higher the resolution the better the sound. This also means that the higher the resolution the larger the file size.
MP3's inherantly do not have the same audio fidelity that CD's do, due to the fact that they are a 2nd generation of the consumer CD. Generally though, consumers will not notice the difference.
Seeing as you are going to install your speakers into the walls, I would seriously look at a quality home theatre type scenario (satellite speakers, power amp, subwoofer, receiver). This way you can wire up all of your entertainment features into the same system. What you can do then is run a line from one of your receivers aux channels to your computer's sound card, & play your MP3's over your speakers. This is what I do.
By all means, be budget concious, but do not substitute a "great deal" for quality. This means that you should be wiring with quality cables (monster cables are the best in my book) & you should purchase the best speakers that your budget will allow.
Do some research on the net, & speak with you local audio pro. They can get you started in the right direction.
Best of luck