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LAME is considered the best MP codec, but don't use VBR. Makes the MP3 player work harder, which draws more from the battery. How much I'm not sure, but it does, as does equalisers, backlight, and constant searching track skipping, which I'm sure you already know.
iTunes use LAME, IIRC for MP3s, as well as the open source AAC format. As the HD5 only decodes MP3, then stick with that at 192, normal stereo (not joint), 44.1 Khz, smart encoding, filter freqs below 10 Hz enabled.
Do that for a few of well known track, and compare with CDex for the same ones. Choose different music types rather than all the same, then you'll get a good idea sa to which works best for them all or certain types of music.
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