In a previous life I was a sound engineer. Under controlled conditions, my own listening equipment and lossless source files, with which I am familiar, I can identify 64kbps vs 128kbps (p = .01), 128kbps vs 192kbps (p = .01), 192kbps vs 256kbps (p = .03), and probably 256kbps vs 320kbps (p = .07), n = 30, LAME=3.something for all tests. If you are in Austin, you can come over and watch me do this in person.
I have no doubt that the general population may be (statistically) unable to distinguish 128kbps vs 256kbps, but that says nothing about a minority of individuals, many of whom are large music purchasers.
Fellow audio engineer here. Mp3 has this noticeable frequency dropoff at 16kHz, which makes it detectable regardless of the bitrate. Did you test mp4 (or whatever), which does not have that?
I seem to remember scientific studies that basically claimed that 192 kBit mp4 was indistinguishable from uncompressed sound.
That said, I still prefer uncompressed audio for mindful listening. For casual listening, I frankly don't care.
I did a similar test with AAC, which as I understand it (not a compression engineer) doesn't suffer from the same 16KHz problem.
64kbps vs 128kbps (p = .01)
128kbps vs 192kbps (p = .02)
192kbps vs 256kbps (p = .05)
256kbps vs 320kbps (p = .16)
This test taught me that (for my ears), AAC 256kbps is a good all-around codec for my music. You should do your own test (you might hear differently than me, apparently I hear differently than everyone in the Gizmodo and Maximum PC "studies"). But I would be surprised if it was simply a coincidence that Apple chose to standardize on 256kbps AAC, exactly the point where I have serious trouble distinguishing bitrates.
The current lame encoder uses a variable cutoff frequency depending on the quality setting. At the recommended "transparent" settings (-V2 or -V3) it uses a polyphase filter with transition band of 18671 Hz - 19205 Hz.
You should be able to discern most encoding effects on £1k/each speakers and a £500 sound card, if not then you have wasted your money.
OTOH as anyone who has tried to write music cheaply knows, distortions much larger than those typically caused by lossy compression quickly vanish on "normal" listening gear.
Of course, the people who care about encoding artifacts are much much more likely to have an expensive signal chain.
There are a small handful of "golden ears" testers that can ABX samples at much higher bitrates than average. You might be one of them. Most people that think they can do this fail to do so in a real test though.
I have no doubt that the general population may be (statistically) unable to distinguish 128kbps vs 256kbps, but that says nothing about a minority of individuals, many of whom are large music purchasers.