I am not 100% sure but there may be Portable audio devices with native flac support as the format is very popular and people are demanding higher quality listening.
iPod touch (the ones that look like an iPhone) can have an app added for .flac. My antique still works and I don't see a need to replace it. When the time comes, I'll have to sacrifice some storage space- but damn, I have that thing packed to the gills with a heap o' shit that I don't play anyway.
Re: Mp3/ATRAC/or any other lossy compression, I guess its a personal choice on what you are willing to accept for the convenience of portability and having many albums instantly accessible in one place for a wide variety of music. Of course you won't have as many albums available on the device if you opt for higher uncompressed quality. In saying that, mp3 did keep me satisfied for some time until flac format and larger hard drives came along that would hold large amounts of audio data uncompressed. I also got a lot more serious about quality and obtaining the best possible source, but mainly in the home.
And that's the reason I swallow hard and put up with .mp3- PORTABILITY! I can take loads of stuff anywhere and connect it to anything. All in all, .mp3 is... ummm... okay... I guess... I used to love my Sony Walkman, go to the park and rollerblade. I consider my iPod to be a Walkman but without the need to switch cassettes.
I'm led to believe that .aiff files are the Apple Macintosh Equiv to the PC/CD .wav format.
Two things to be gleaned from my posts: I'm a MacHead and a bigoted analog purist. If I'm transferring from vinyl to digital, I save the files as .aiff to burn a CD first and then as .mp3 for the pod. I'm also a redundant bastard with my files.
I haven't tried, but does Audacity open .flac files for editing? (Experiment for later on today...)