I previously discussed the best bit rate for the MP3s you distribute. (Short answer: Probably 128KBps or 160KBps, but test your own music to be sure.)
There’s a more important bitrate for most home recordists, however: The number of bits you use to record raw tracks. In all likelihood, your recording system gives you two choices, 16-bit and 24-bit. So which should you use?
Tweak has the most accessible discussion of the subject I’ve read. Short answer: Record everything you do at 24-bit. The article spells out a few good reasons, but here’s the meat of it:
You can record at lower levels, with more headroom. This ensures that the occasional peak is not truncated at the top and it will give converters some room the breathe. Because you are not pushing the limits of your bandwidth, your instruments will sound clearer, and the vocals may sound “cleaner”, the song will mix better and there will be less noise.
(The article also touches on the optimal sample rate, and while I agree with the conclusion, it’s for different reasons. For more details, see the discussion of the myth that higher sample rates yield more accurate recordings.)