The iriver IFP 899 can most definitely record in mp3, in fact it's the only format that it knows how to record! Maybe your friend got a different model or something? You do have to apply what's called a UMS firmware upgrade so that windows will recognize the iriver as a drive, kinda like the archos does with the USB cable. So if you get an iriver IFP 899, just apply that firmware upgrade, and then go into the menus and set things up how you like them, and start enjoying the iriver!
I have a few questions about the Iriver 799 and 899. My friend is thinking of buying one because of all of my drooling. I want to know some answers to a few questions so I can relay them to him. He bought one last night and then found out that the iriver DOES NOT record directly to mp3. You have to use their program to convert recordings to MP3. He said the UMS thing only works on earlier models. Apparently, they don't want to get into trouble so they make the recordings in .REC format instead of mp3. Is this true, and if so is there a hack that we can apply to make the UMS Driver work and allow us to record in mp3 format?