iTunes 9.1 now has a space-saving checkbox when you plug in your iPhone, iPod touch, or iPad.

When you select your device in iTunes, you'll see a new checkbox in the Options section that allows you to convert higher bit-rate songs to 128 kbps AAC.

When you select this box and sync your device, iTunes will automatically downsize the songs being sent to your device to 128 kbps. This is a smaller bit-rate, and therefore a smaller audio file will be uploaded to your device. 

Of course, audiophiles will probably be scoffing at this checkbox because some may make the claim that higher bit-rates sound better. But, you can barely tell the difference in quality, especially with Apple's included earbuds. Plus, you can seriously save some space by doing this. We saved ~6 GBs by converting our 1,324 songs on our iPhone to 128 kbps. Now, we have plenty more room for those iPhone and iPad applications. Oh, and who can forget our Mythbusters subscription?

Before checking the magical box

After checking the magical box

via Just Another iPhone Blog