Instructions for adding CD to MP3 import option to Banshee
First you need to install the missing LAME packages:
sudo aptitude install gstreamer0.10-lame lame lame-extras
Then check your gnome audio settings:
$ gnome-audio-profiles-properties
You should see CD Quality, MP3. Highlight it and click Edit. Make sure it has Active checked.
Start up Banshee again and check the import properties.
Original article here: http://ubuntuforums.org/archive/index.php/t-451449.html