Lots of technical speak here, well over my head in most cases.
One thing I will add (that'll never get read being 5 pages deep in the comments :P) is that some poeple have listening habits that will in a way raise their perception of differences - and of course the genre argument (punk recorded in a shitty run down studio - mp3s will barely make a difference - classical/jazz/electronica that's been recorded and produced with the highest quality in mind from the start will almost definitely benefit from FLAC).
What I'm getting at is that someone who listens to tracks or albums over and over again - usually fans of a specific artist - will begin to perceive even the slightest differences as they will have "trained themselves" to expect a certain noise at a certain time. My personal favourite for this is Aphex Twin - very highly regarded electronica. Some outlets (e.g. bleep.com) sell their music as mp3, WAV, FLAC, and in some cases 24bit FLAC (I won't pretend to say I can tell the difference between 16bit and 24bit FLAC, but MP3s and FLAC, of music I *know*? Yep. definitely).
Anyhow - it's an argument (or a discussion) I've had with many, many people, as soon as they realise I'm putting 200-500Mb per album onto my phone - then using my phone in my car for music. It's not like I'm going to convert all my FLACs to MP3 just so I can hold more on my phone because the listening situation means I'm not getting the maximum benefit - but even in teh car, if an MP3 threw up a warble or some colours some noise in a way I'm not accustomed to I'd notice. Not in an "this offends mine ears!" way, more of a "huh, that doesn't sound quite right" kind of way.
Tl;dr (aural) beauty is in the (ears) of the beholder. Or something.