As others have said, the computer shop guy has no idea what he's talking about.
There are three issues here:
(1) The resolution of the audio: bit depth and sampling rate
(2) The type (if any) and amount of compression: No compression, lossless compression, or lossy compression
(3) File formats (usually called containers) used to hold the audio information
"CD audio" is a specific audio specification: CD/redbook resolution (16 bit, 44.1kHz sample rate), no file compression, and the file format, as noted above, is LPCM, linear pulse code modulation. CD audio only shows up on CDs. If you rip a CD to your computer, you can retain the same resolution and audio quality, but the ripped files will not be "CD audio" per se; they will be in another file format (see below).
WAV is a file format: It can be CD resolution, but it also can be higher resolution (24 or 32 bit, and/or 48, 88.2, 96, 176.4 or 192kHz sample rate). It uses no file compression, and the file container is WAV.
mp3 also is a file format: Its resolution can vary similarly to WAV, but it's rare to find an mp3 that doesn't use regular CD resolution. It uses lossy file compression, throwing out some of the audio information in order to shrink the file size. The type and level of compression can vary significantly. And the file container is mp3.
As the above illustrates, mp3 is superior if you need to save room on your hard drive or iPod. There also are probably some (though very, very few AFAIK) devices that won't play WAV files. And mp3s are easily tagged - you can add artist and album info, album art, etc. while WAV doesn't have as much of this capability.
For sound, though, WAV is superior because it's lossless while mp3 is lossy.
Finally. as others have noted, there are better and more common formats in use now:
- FLAC and Apple Lossless are file formats that use file compression to produce smaller files than WAV, but their compression is lossless so they retain all the musical information, unlike mp3. Apple Lossless is just as taggable as mp3, and FLAC is almost as taggable.
- SACD, DVD-Audio, and Blu-Ray Audio are audio specifications for physical discs that offer higher resolution than the CD Audio found on CDs.
There are many other formats (AIFF is like WAV only more taggable; APE, SHN and others are like FLAC and Apple Lossless, but not nearly as common these days; AAC is like mp3 but offers more efficient compression). And there are many other permutations - for example LPCM is the file container for CD audio, but LPCM also can be a container for higher-resolution audio, like the 16 bit 48kHz audio on many DVD video discs, and the higher resolution audio on DVD-Audio discs.
For computer audio, the simplest thing to remember is that FLAC and Apple Lossless represent the best combination of audio fidelity, file size, and taggability, and that if you are going to use or make mp3 files, the higher the quality setting, the better - 320kbps as someone above mentioned.