Lossless will maintain the maximum possible mathematical
quality, but I use Ogg encoding at quality 10. It will still reduce the filesize (I've found it to compress between 50-80% of original) and use Lossless when it is best.
As a general rule, I've found Ogg to be better than MP3, but depending on the actual encoder used, YMMV. (Rarewares
has some excellent modifed Ogg encoders; I like the GT3 builds.) Some believe that MP3 is better for higher bitrates than Ogg, but as I said, it is relative to the Placebo Effect and the actual encoder used.