We only use .wav for sounds. About the file size issue, I did convert a 40KB MP3 file to a 300-311KB wav file and it seemed too large for me, but the quality sound was nice. What I did was that if I want to retain a quality sound but at the same time have it reduced to a smaller size, I always change it from Stereo to Mono since listening to it with Stereo sounds low while testing in-game to my ears. I toggled the Envelope Tool for enlarging or shrinking the size of the sound wave. For this file, I enlarged it because I wanted to hear a little higher sound. To my surprise after saving it, its file size reduced after I modified the size of the sound wave. If I save the file without modifying the sound wave, it will retain its large size. It may not work similarly to anyone, but this is what I did.
You can take at these inside this file in this attachment. One is the original MP3 file. Another one is with its unmodified soundwave and the other being modified. Compare these. I use Audacity for this.