On the Stanford iPhone class they have some sample code for using AVAudioPlayer (it's in 2.2) and they are loading an mp3 from within the project.

http://www.stanford.edu/class/cs193p/cgi-bin/index.php Lecture 20 - 20-AVWSamples.zip

This is an intersting area to me, so post any reasons you shy away from it. Cheers!