What kind of audio files are you using in your iPhone games/apps?
I have a game with 30MB of sounds in .wav format and I'm thinking of maybe converting to .mp3 to reduce the app size... Is there a major difference in performance? Any other issues?
Both AAC and CAF formats work fine and offer decent file sizes. For certain background looping tracks I found MP3 files getting too big, but YMMV. Experimenting with a decent sound editing app is the only way to find the right balance between size and quality. I've had pretty good luck with Audacity and Amadeus Pro.
Suggest listening to the output with a pair of really good noise-isolating headphones on the device itself. Most people won't be listening to your stuff with these but as you decrease sound quality to shrink file sizes you'll start getting static and hum artifacts. It's just a matter of balancing size vs. quality and what you're willing to live with.