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My favourite is Total Recorder, from High Criteria. This can record straight to mp3, even using the LAME encoder (if you download it and put the DLL into the same folder as Total Recorder).
Personally, I always record to WAV, but Total Recorder has never let me down when recording (often over 2 hours straight) whereas some other programs (Sound Forge) I never managed to get reliably recording much over an hour.
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