The reproduction of mp3 depends quite a lot on the type of music (and how well it's mastered, but that's another matter).
High symbols sound crap on mp3 regardless of bitrate - it filters and/or distorts the very high frequencies too much. The lower the bitrate, the more noticeable it is, but it is still distinguishable at the higher rates.
Mids/high mids tend to be reproduced fairly well by mp3 >128k, although it goes downhill from there.
As a general rule: 128k absolute minimum. OK for el cheapo speakers.
192k seems to be good for the vast majority of people.
Encoders can make a difference - LAME is supposedly one of the better ones.
Depending on the genre of music, I can tell the difference between mp3 and lossless - yes, in blind tests in as much as I think "why does this sound so nasty?", then look at the bitrate/format and my question is answered.
Regarding speakers, I used to have a set of 5.1 Genius speakers (I forget the model) which sounded pretty good for the power (27.5w RMS). I now have a set of Creative 7.1 speakers, which are noticeably better.
An ex housemate has a set of Z-5500s, which are better, but not worth the extra cost quality wise. They keep the quality up to painful volumes, and the sub is no less than brutal, so probably worth it if you like that sort of thing.
If you have a good amplifier, don't ruin it by using a mini-jack to phono cable and relying on the analog preamp in your sound card. Run digital signal, or you're wasting your money.
The quality of the power cable is completely irrelevant as long as it's not arcing somewhere. If you really care when using an expensive high end system, use a signal rectifier for the AC.
*Disclaimer: I am far from an audiophile, but I have been into fairly regular contact with high quality, high power FOH sound-systems so I know quality when I hear it.
Perhaps I can tell the difference between mp3 more than many other people, because I don't like the compression artefacts and others like the 'smoother' mp3 sound. Who knows.