AIFF or WAV. As you've discovered, AE does NOT behave like nice software should when dealing with compressed audio.
That goes for compressed audio in the audio tracks of video footage, too.
Thanks Dave! It is a bear to work with when dealing with mp3's. I have the latest version and having to click on the spacebar twice to get it to pause and play is more than frustrating. I am actually rebuilding my entire project in Apple Motion. I don't have time to deal with it right now.
Specifically the industry standard is 48 kHz 16-bit stereo linear PCM WAV files for video. AIFF 48 kHz 16-bit is also good.
You can mix your final audio in audition using higher bit depth and sample rates. For really professional work you need to learn all about Dolby standards and THX, but that's a much deeper subject.