1. MP3 as that is likely the only format your car deck supports. Many support iPads plugged into them as well but since you are talking an USB stick, it will be MP3 you most likely need.
When I burn any CD, I make a FLAC copy as well so I have a lossless versions for home listening but I also make an MP3 for my iPod and my car. I use 320 Kb/sec when I rip to MP3, just so I'm not subconsciously paranoid, but you could go smaller and still be good. Bigger number = less compression used but bigger file sizes so you fit less on your stick.
2. I use EAC as I have it all set up for automatically making MP3 and FLAC copies at the same time. However, I don't actually recommend it as it has a much steeper learning curve. I will let others chime in on much more convenient solutions.
3. Yes. Use folders to organize your artists and CDs. I start with a folder for an artist then have a sub-folder for each album. Some car decks simply use the folders for on-screen browsing.
Also, MP3, Flac, etc. all use a system called "Tags". When you rip the CD you will have an opportunity to fill in the artist, album name, track names, genre, etc. More complex car decks will use this tagging information to let you browse in an organized fashion. Either way, you should be good.
Also, most ripping programs have the ability to go out to sources on the Internet and automatically add all the tag information as soon as you pop the CD in the computer. You just have to be careful it actually picks out the correct album. I usually end up tweaking this information a just bit in order to keep my entire library consistent.
