iTunes compliance audiobooks have the extension m4b. They are "bookmarkable" allowing listeners to stop and continue listening at any point in the book and includes chapter markers.
Audiobookwizard takes mp3 audio files and compiles them to m4b format allowing export to iTunes library and use on iPods and iPhones. It is also possible to use this product to compile multiple mp3 files into one m4b file e.g., party mix or podcast. It will also optionally tag the m4b file with iTunes metadata such as cover art, artist information, album information etc.
Audiobook Wizard is simple to use. Simply drag and drop you files into the program window, sort and re-arrange as desired. Once ready, start the conversion process and wait for completion.