Earlier quoted context omitted.
I'd be surprised if they don't support ALAC, Apple's lossless codec. Can't say I have any iPods or iPhones to try it out myself though. Apple generally has a very strong case of NIH.
I was under the impression that Apple chose to develop ALAC because it was less CPU/battery intensive to decode. This is going back to iPod Rev.1 days, mind you. Processing power for simply decoding audio CODECs hasn’t been a challenge for some time now.
MP3, FLAC (and I assume AAC) requires floating point math to decode.