Being poor, *grin*,one of my hobbies is finding FREE programs to do most of the things I want to do on a computer. I have accumulated a number of audio programs that will record, edit, play, convert almost any format one could wish.

this one JetAudio will do all of what I think you want in its paid version, but its free version will not create directly an MP3 file. It will record (from any sound source- mic, soundcard, etc.)in either .wav, or in Ogg Vorbis, a very nice new format with excellent sound and compression. ...Then, if MP3 is needed, it is possible to convert from Ogg Vorbis to MP3 using something like Audacity, an amazing FREE program which will allow editing of the music file, then export (convert) it as MP3 using a plug-in .dll file found at ftp://ftp.zlurp.com/dll/lame.DLL/3.87/

(I just did this as a test...now I have the same piece of music in both ogg vorbis and MP3)

There are other combinations of programs one can use to get this result, or one can just spend $$$ and do it with one program.

(note..Jet Audio is not a small program...it is 15 megs, but it does and amazing amount of stuff, and the free version is well worth having no matter what you use for other tricks)