Being an iPod virgin is an enviable thing to be because you have something life-enhancing to look forward to. Everyone deserves to own an iPod. A little of how it works and what you would need. Yes, you'll be effectively doing away with the need for those boxes of CDs. I have three large document boxes full of hundreds of CDs but carry all of them around in my pocket. I have the 60 gigger iPod photo, which is the largest capacity model, but even with nearly 8000 tracks (remember that your average CD might have just 15 tracks) it actually has only used less than 25 gigs of space. The iPod photo, as the name implies, can also hold 15,000 photos.
Using a computer (we're an iMac house but PC's fine too) you upload your music onto iTunes- freely available- which is effectively a categorisation system and music store, and then download to your iPod. Doing this, depending on how many CDs you have, will take some time- you could allow 3 minutes for each but it depends on your processor etc. There is at least one company in Dublin who will do it all for you, charging I believe about a euro per CD. Rich and reckless people just buy all their CDs again from the iTunes store and this way the original cover art can appear on your iPod screen when a CD plays.
Sound quality through headphones is indistinguishable from the original CD and the speakers you buy determine the quality of the 'room' sound. Altec Lansing- just one brand of several- are fine; a little trebly but very neatly portable. This is one of the joys of iPod- rent a cottage for the weekend/get on a plane/climb a mountain and bring all your music with you (or audio books or podcasts or The Goon show etc.,) as easily as carrying a washbag. The acknowledged Daddy of iPod speakers as described in the Irish Times (great that they've caught up: you might have read an article like this in a London paper two or three years ago, indeed a London journalist has had time to write and publish a book of the same title as Roisin Ingle's article) is the Bose Soundock. Bose themselves are hopeless to deal with (at last an opportunity to tell someone- I told them in a letter but got no reply, so at least they're consistent) but this is a superb accompaniment to the iPod, if pretty much the same price as the iPod itself or more. If you have two sets of speakers, one upstairs and one down you can carry the iPod between the two and use it where you want; or buy two iPods and load each. The iPod reacquaints you with your collection and lets you have music everywhere. It is simply brilliant- and though primarily designed for personal use is easily capable of replacing your audio system, although purists and anoraks will no doubt rush to disagree, while bemoaning the loss of covers. The Apple Ireland shop online is a good place to buy- not surprisingly they sell their own stuff as cheaply as anyone- and I've found them efficient and prompt. Once you have an iPod then getting everything else is easy; there are good sites in the US and UK - iPodworld is one- who are good to deal with. Pretty soon you too will be evangelising. By the way, nearly everyone around me knows more about techstuff than I do, so don't for a moment think there's anything forbiddingly complicated here- Apple, as they originally said, are for the rest of us. Enjoy the ride.