FLAC is loseless, meaning it's audibly identical to the source format. There are two common misconceptions about FLAC:
1. That's it's lower quality than uncompressed codecs (eg WAV). This is total crap because compression in this case is unrelated to quality. The FLACs are uncompressed to loseless in real time (think of RARs, when you unRAR something the output file is not worse than what you put in, the same with FLAC).
2. That it guarantees very good sound quality. Although it usually does this is not 100% as CDs can me mastered lossy and obviously low quality sounds can be transcoded to FLAC, it depends on the source. For all intents and purposes though FLAC is extremely good quality, too much so really. You will never be able to tell the difference between V0 MP3 and FLAC.
Unless you want carbon copies of a CD to burn with a CUE file (a kind of blueprint for a CDs content) do not download FLAC.
V0 and V2 are the newer variable bit rate encoding options for LAME (replacing APS and APX respectively). LAME is the best MP3 encoder without a doubt.
Variable bit rate (VBR) is the efficient way to encode audio as it gives more quality to areas that need it and less to parts that don't (like really quiet areas).
They are in contrast to constant bit rate encoding options (CBR) that just put a flat rate sound quality to all parts of a sound giving a larger file size and in some cases worse sound quality in comparison to the VBR equivalent. CBR encodings are represented with whatever bit rate is constant (usually 320 or 192 kbps).
Again 320 is overkill, you will never be able to tell the difference between it and V0, plus V0 is smaller in file size so always get it over 320 if it's available.
If I was to be honest it's not likely you'll ever even be able to tell the difference between V0 and V2 and to go even further there's a good chance you won't be able to tell a V2 rip from a 192 rip.
Since V2 has a nice trade off between file size and quality I'd say get it, you won't be disappointed. It's probably better than what you've been downloading anyway.
MP3 is not a dying format yet even though it should be, as a side note encode a song with Nero's AAC codec at .35 VBR (~100 kbps) and you'll see (hear?) you can't tell it from a FLAC source even though the m4a's file size is a tenth of the source. Even at .25 you'll only start to hear the difference.
OGG and AAC are far better than MP3.
Most people (me included) don't have the training or the sound systems to hear the legacies that lossy codecs leave behind on audio (and the frequencies cut out) so ignore the elitists if they tell you otherwise.
In short: Download V2.
