From what I've read, vorbis had a better compression and sound at lower bit rates (64Kbps, maybe even 128Kbps). I don't plan to encode mine that low, so the benefit is lost when compared to the convenience of mp3's support.
I agree, the iPod should support vorbis, but I have no control over that. The only player I considered which supports vorbis is the iRiver ultra portable players. They are more expensive than I like, so I stopped considering them. If more players did support vorbis, I would have considered encoding all my files with their codec.
What other codec's use the ogg extension, I was only aware of vorbis. That was my mistake to assume an association between both. I don't mind the lossy compression since I'm encoding from my original cd media. If I need the best quality playback, I'll use the original. My digital library isn't a backup copy, but if it had been I would have gone with FLAC. My point with vorbis being a lossy codec was that I didn't see the benefit over mp3. The only benefit is arguably sound quality.
The reason I didn't use FLAC was for convenience. There aren't many (if any) portable music players that support the format, and as I explained above, I didn't need it for archival purposes. The only device that makes me think twice about using FLAC is the slim devices squeeze box. but I'm not certain I'll be buying one of those any time soon.
I'll try a listening comparison between both, but I don't suspect I'll be able to hear the difference.