For dialog, take a look at this: http://www.tesnexus.com/downloads/file.php?id=7877
According to that, you need a wav file in order to hear anything while in the dialog editor and to generate the lip files. The game will then play mp3 files of the same name. He doesn't mention it in the video, but I'd assume once you're ready to release your mod (or just don't need to do things with dialog anymore), you'd want to delete the wav files to save space. Also, it seems that while with FO3 they added support for the game to use ogg format in place of mp3, it's not reflected in the GECK - that is, in the "Edit Response" form, the audio file paths always specify an mp3 extension. I'd assume you can still use mp3's for dialog too, but I've never tried to create new dialog myself, so you'd need someone else to confirm this - or just test it yourself.
I don't think you can use MP3 for dialogue. I tried and couldn't get it to work. You can use ogg though, if following the steps I mentioned above. Lip sync generation is broken as of patch....version I can't remember. But it's broken from all the sources I've consulted. I had to scour extracted lip sync/dialogue sound files to find lip sync files that 'fit' my custom dialogue.
you can specify a folder here instead of a single file, and each time that defined Sound is used it will randomly play a valid file in that folder (sub-folders are ignored).
Are you serious? Can someone confirm this works?
[edit]
Bloody hell, where were you a day ago when I was trying to find a script that would allow me to randomize sounds? Well, at least I learn something stuff about scripting...