In terms of resolution, FLAC = WAVE = MP4 ALAC (Apple Lossless).
Wave is rather useless on an iPod. It is full size and can't support meta data without a lot of effort.
FLAC is a free lossless audio codec. It's free, so people love it! No lock in. Apple does not support FLAC because it supports its own lossless codec. ALAC will sound EXACTLY like the FLAC files if transcoded. A simple tool to do this is with dbpoweramp Grab this awesome software for relatively cheap and if you buy FLAC files online, transcode them to ALAC and dump them on your iPod all in a matter of seconds. Seriously, seconds.
Older iPods are able to play FLAC files by adding an open source operating system onto the unit and dual booting. It's called Rockbox and is quite a polished system but it chews up battery life and for most instances, is really only worthwhile if one wants to play file formats the iPod doesn't support. In that case, just use dbpoweramp to convert and be done with it.
As for getting the most out of one's iPod, the iPod, if housing ALAC files (ir AIFF or WAVE) will be an exceptional transport! Pick up Wadia's Ipod Transport and this doc BYPASSES the iPods internal dac and allows bitperfect digital signal to leave the iPod and get streamed to whatever stand alone DAC is in one's main system.