the best program for audio capture, imho is gramofile.
its ncurses based, so it runs in a console but it works quite well. it also has some scratch removal filters for records. basicly just hook up the player to audio in and let it rip
some people suggest puting the audio through a preamp before it goes into the puter, i think these are quite small and cheap and will greatly improve the sound.
if you have the hdd space, don't encode them to mp3, you write audio cds as wavs, so you will just loose quality if you encode them then have to 'uncode' them