The 12" Story of LPs have already been captured and released at 24bit and 16bit.
I concur that the audio files should be WAV or FLAC. Both are uncompressed file formats, the latter being smaller in size.
It's better to work with WAV while you're working because this format will work more easily with audacity, audition, etc
http://audacity.sourceforge.net/
Audacity is free open-source software and might be good enough for this project. Don't go anywhere near MP3
Likewise, with the graphics, don't go anywhere near compressed formats such as JPG - only work with uncompressed formats: BMP, TIF, PNG, etc