You can absolutely rip at higher than 128. I rip at 160-256, depending on how I'm feeling on any given day. Generally, I find AACs (the primary format in iTunes) to be higher quality than MP3s at a given bitrate, but other people (violently) disagree. iTunes is a free download, btw, so you can get it and check out its burning capabilities for yourself. For reference, a 256 VBR AAC takes up about 11 GB for a 5 minute song.

I am the Doctor, and THIS... is my SPOON!