You can't just compare .mp3 and .mp4 as they're totally different things.

MP3 or it's full name is MPEG-1 Audio Layer 3 and is a lossy audio compression system. You only get audio in .mp3 files. Various hacks have been made to add song information e.g. ID3 and other random bits of data.

MP4 is actually MPEG-4 Part 14 and a file container system which can contain multiple streams of data for multimedia. It can contain audio, video, pictures, subtitles etc... It can contain MP3 streams or a whole bunch of other things. Normally you'll use AAC for audio in .mp4 files which provide better quality for a given bitrate than MP3.

MP4 is not supported by the empeg with any version of the firmware.