Tomas, what's even scarier is that a major local retailer here in Australia (Dick Smith Powerhouse, who own Tandy/Radio Shack here) is phasing out regular CD's, and now has a computer kiosk where customers pick and mix their own CD - all compressed files, about 5MB per song. When I asked a salesgirl if I could do a pick & mix CD of uncompressed music, I got an emphatic 'no'. The writing is really on the wall for CD's; start buying any discs you've always wanted now!
As for Ian's original question...
iTunes only does compressed files. There are other sites that allow full-res downloads, which you'd have to convert to a file type iTunes and your Touch can use.
That said, 32GB will be swallowed up pretty quickly if you want to do AIFF or Lossless; maybe decide how much critical listening you're really likely to do with your Touch, and maybe stick to High Quality AAC rips. That way you'll fits hundreds of still excellent quality audio on what is essentially meant to be a portable (not home) device.