.wav or .amr (if device supports).
.mp3 just encodes pcm(.wav) to .mp3 after a call
Is that always how your application worked? I used one of the alpha versions when I had the MyTouch 4G and it seemed like it recorded STRAIGHT to MP3 when I set it to MP3 format. I loved that about it, plus there is a general (not call) recording app I use and it can record directly to mp3 and works fine and I would think it would be better to have the phone record directly to MP3 during a call, especially a 1ghz phone or higher which is clearly capable of doing so. Maybe you can put that as a checkbox option to record to mp3 in realtime or do a conversion after the call? That would be killer!!!! Than people with slower phones could just do the conversion when they aren't really using their phone!