It’s not my intention to push iTunes, but if you have an iPod now, you will have to use it. The free tagging as Sperlsco has described is totally possible with iTunes too. Usually, I don’t use different CD numbers for one single work, but set increasing track numbers and simply name the whole work as one album. There is no need to use different CD names like M5-Disc1, M5-Disc2 for a 2-CD-set, but you can assign the identical names to all tracks you want (also across CD’s, composers, etc.). The track numbers are open too. Internally, the iPod plays the album ordered with respect to CD number and then track number. It doesn’t matter where these numbers start and stop or whether there is a gap – only the order counts. For e.g. the Chailly M3 with the Bach suite became two works in my administration: the Mahler part as one “CD” with 6 tracks, the Bach/Mahler part another album with the remaining tracks, starting at 1.
If you want to store this is as one album, simply use track numbers 7,8, etc. for the Bach (or 11, 12). Only if you want to see during playing, that you at CD-2 of the set, you have to assign a name like Chailly-M3-Disc2 to the second CD. But the player and the software - as most of the others - support the idea of a "work" independent of the original medium. That's the concept of tagging: order your files independent of their location on a computer, their original name and order etc.
Regarding AAC and MP3: people say, that you can save 30% memory with AAC for the same quality. I did this for a long while. However, whenever you want to switch to other players later on, you will have to re-encode the files (conversion from AAC to MP3 will not really increase quality). I learned this the hard way and since then use higher quality MP3 (192-256 or VBR) only.
Michael