It depends. For just listening to music during a construction day, we just use MP3's. However, for a show we use full quality CD's (or comparable AIFF's).
for personal use i have all my music on my comp and iPod. at school we use cds and for most rentals and or shows we usually get stuck with cassette tapes.
for load in, and set construction its usually mp3's, through an iPod through the sound board. For shows, its always cd. I wouldn't mind trying MD though.
CDs and they don't fail me. As long as you have a decent CD player it should be fine. The Sony I use doesn't have much trouble reading past scratches. That and using CDs gives me options that I don't have otherwise. Maybe one day I'll move over to the mp3 revolution, for now though I'll stick to cds.
usually i just use cds for shows and stuff - we have a really old tape player though, and lots of tapes, but i've never used it since the guy before me said it's crap haha