bradstewart: I use the new Nokia Music Manger to convert mp3s to AAC 128kbps which average 4-500Kb in size. Sound fine when using headset. I have 900 songs on my 512Mb card
I rip directly from CD to 192kbps AAC, and my songs average about 6Mb, so I have no idea how you managed to get 128kbps AAC files down to 0.5Mb. The fact that you're converting from one codec to another shouldn't acheive any additional compression, although doing this is a no-no anyway. You must always encode music straight from the uncompressed source and, frankly, I don't believe for a minute that you could get a 3 - 4 minute song down to 0.5Mb and have it 'sound fine'. If that were true, then noone would ever buy a 30Gb iPod!
One of the unfortunate side effects of the digital music age is the observation that more and more people are sacrificing quality audio reproduction in favour of cramming more and more heavily compressed rubbish onto tiny flash memory cards. If we really do have technological progress, then we should be enjoying better audio quality, not worse.