Last time I used it you could import mp3's to edit, but not save the edited version back as an mp3, only as a wav file - if that makes sense!
I just downloaded the most recent version. All you need is the lame encoder dll, when you try and export as an mp3 it actually gives you a download link.
I don't think there is a paid version of Audacity is there? It's all completely free.
Download the latest beta version - although if you're on windows 7 you have to anyway.