Good point, DBerG. I've noticed that since I upgraded to the latest version of iTunes, the podcasts I subscribe to are being converted into 128-bit AAC files and placed in my library. So as far as I know, the answer to your question is yes.
"You spent family money on something for yourself!"
"There's a trickle-down theory here. If I'm happy, I'm less abusive to the rest of you."
If you don't want your podcasts to mix with your music in iTunes 5, you can go to the edit menu and select "Show search bar". Then it's just a matter of clicking on the "Music" tab in the search bar when you have your "Library" selected, and iTunes will only display your music with no Podcasts or Audiobooks you may have in your Library, and will only shuffle these. Of course you can always select "Podcasts" or "Audiobooks" or even "All" in the searchbar to show these as well.