I use Adobe Audition for my recordings. The default setting for saving the "mixdown" is Mp3 128 Kbps, 44100 Hz, Stereo. However, I changed it to save as Windows PCM .wav instead even though it takes up more space. The .wav quality always sounds better to me, and I keep them on my hard drive in that format if I ever need them again for whatever.
For submitting to the showcase: Once I've saved it in .wav format, I go into GoldWave and slice off the beginning silence and some of the end if it drags on and on (occasionally fading it out). Then I "save as" an .mp3... usually I start off with 112 kbps and see what I get. If it's still over the 3MB limit for submitting, I then use dBpowerAMP and choose an even lower bit rate until it's just under 3MB. Of course the quality is diminished, but it still doesn't sound THAT bad.
But y'know the easiest way to avoid all that? Buying a membership. I'm still a cheapy free member.
I don't sub often enough anyway to need more upload size.