As I've said, I've never used FLAC, it doesn't change the fact that when you play it back, it's an altered version of the original file. I'm not saying that it sounds as bad as MP3 or that it'll sound worse to human ears than a wav, but the fact remains that it is a compressed, altered file. Hell, even if FLAC was perfect, the conversion from wav to FLAC would lower the quality the same as if you converted an audio file between two uncompressed formats.
If the OP had said "How to get a good quality sound from an iPod", then there's nothing wrong with lossless audio (hell, I just stick with MP3 and AAC and accept the quality). They asked how to get the "best" quality sound and the ONLY way to do that is to use as close to the original bounces from the recording session as possible which for most people is a wav rip from the CD.
Maybe it's just snobbery from working in studios (both as engineer and artist) for the last 10 years, but I refuse to believe that anything other than the original file is truely up to the quality of the original. If something was invented that did perfectly preserve the original file whilst shrinking the size, I'm sure it'd be well known about by now.