I have heard Matty's statement before. I don't doubt the statement, but my question is how? How is it possible that a vinyl record has better sound quality that a digital source? It seems to go against logic.
Basically think of it like this. An analog wave form looks like a bunch of sine waves (think back to high school math/physics). It is smooth. A digital wave form is composed of a bunch of dots (1's and 0's) and if you zoom in really close, looks more like a staircase. The standard for CD's is 16bit 44.1khz. MP3's and generally over the air digital delivery is usually compressed and the wave form gets distorted even more.
Pro studios have a higher sampling rate maybe 96-192khz and maybe they will use 24 bit, and that will make things sound smoother, but it will still never ever be as smooth as the original analog wave form. Plus they have to down-sample it for the consumer otherwise you will have like 500MB+ files for each song and it would n't fit on a CD.
Whenever you record an analog source (let's say a guitar) into a computer, you are converting it to 1's and 0's and you lose the original wave form that is coming out of the guitar or someone's mouth. The wave form passes through a lot of electronics, esp the A/D converter (analog to digital) and all of this can effect how the digital signal is finally captured by the digital recorder (i.e. the computer). Furthermore, lots of producers like to use a mix of digital and analog equipment and will have to pass through A/D and D/A converters multiple times, further degrading the original signal. In the old days, they recorded to high quality tape directly from the original source and you would retain the smooth wave form which can then pressed to a record.
Also, during playback (i.e. iPod), you are at the mercy of the iPod's D/A converter (i.e. the chip that converts the digital MP3 to the signal you hear through headphones).
Another thing to consider is that digital processing done these days is "too perfect". What I mean by that is they have all these digital algorithms for compression, effects, eq, etc.. All of the older analog equipment have certain imperfections, and some will argue that this is what makes them sound the way they are. You can even make this argument for a record player vs iPod. For example, you may like the all the snap crackle and popping coming from a record player. That's why even a 12" record made these days that comes from a digitally mastered source will sound different (or argueablely "better") than on an iPod or CD. Because of the imperfections, analog circuity and also because it doesn't have to pass through the final D/A converter like on an iPod.
In the overall scheme of things, I don't think it really matters to most people. You can actually make a similar case for digital photography.