The arguments are really quality- or ideologiaclly- based rather than file size based.
eg, As mentioned above, FLAC is a lossless compression, so really is CD quality. Whether that really matters in a car-based player is open to debate, but if people are also using their players with a high end home stereo system, or even just the files through an HTPC, then it boviously makes sense to have the best quality that you can.
Ogg Vorbis is a truely open spec, with no patent royalties required. Even though Fraunhoffer (spelling?) didn't appear to collect many royalties from his early mp3 patents, I'm guessing that he is from the mp3pro licensing. Ogg also has some technical potential that mp3 doesn't appear to, such as compressing 5.1 audio streams. Ogg quality is said to be on a par with mp3pro.
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Mk2a 60GB Blue. Serial 030102962
sig.mp3: File Format not Valid.