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You can select ANY format at ANY bit rate. Thats why its so fantastic. It has MP3, WMA, OGG, FLAC, Monkey Audio and of course the icing on the cake for some people- MPEG4 AAC which is iTunes compatible.
Payment is based on file size so the better the quailty, the more it will cost. I always get my music in MP3 format at 192kbps so the average song costs, oh around 5c! :D

Another neat little app is the Explorer which you download to your computer. This app downloads the contents of the site so you dont even have to go online to check if they have the song your looking for, its also updated automatically when they add more songs. It also acts as a download managed so you can buy several songs or albums and they will be downloaded one after another, simultaneously or whatever way you prefer. All in all very nice!