OGG is at least equivalent to MP3, and my tests have all come out slightly smaller and sounding the same or better.
I was considering mod files for my game, actually. It may seem "old-fashioned" now but it was developed specifically as a game music format, and has a few advantages for game music because of that.
impulse tracker or *.it is the best format for mod, because they have what is called "new note action" - so on every new note, you can either sustain, cut the previous note off, or quick fade.
The advantage of mod for games is that every file is only as large as the samples - you can add in repeating sections or more sections and it will only take up as much space as the text for those sections. You make a mod file 10 minutes long for one area of your game, and it isn't much larger than one that is 3 minutes long. You have an audio file that long, and even with ogg at 128, it's still around 10 MB just for that one file!
Also, mod files loop perfectly, whereas true audio has to be "adjusted" for looping, and certain compressing software adds in a second of silence at the beginning and end anyway.
If the impulse tracker format could be updated to use a compressed format such as ogg for samples instead of wav... it would be *perfect* for game music! Maybe *.otx for oggtracker?
Sound effects should definitely be ogg, though.