Apple Audio Compression. iTunes' default audio compression, usuly at 128 kbps, but it can go as high as 320 kbps. It also is the iPod's compression of choice. It doesn't like MP3s, which sucks, and don't even try to use WMA (Windows Media Audio)
If you use AAC at 128kbps on the 5th gen iPod (iPod w/ video), you actually can cram 7,500 4min songs on it. Anything else (compression OR bitrate) _will_ screw it up. The ipod will still think its songs are encoded in the above (default) compression ratio, and when it reaches capacity, you'll end up trottin' down to an Apple Store for a refund on account that the iPod thinks it still has some space left but it's, in fact, full to capacity, or vice versa.