If you like a good sound by less MB, use the latest LAME build (v3.96) with VBR96kbit-112kbit, Joint Stereo, Quality=0. Works great with the "beta 7" player from K2YAA and I get a bit more than 2 albums on a 128MB SMC.
If the programer from GP32 MAD would compress the player from 1,1MB down to...