I agree with Scottyee that the difference between MP3 and CD is discernable. However for most live situations and audiences the nuances lost due to MP3 would not be audible anyhow. Studio - no contest!

In my live situation I'm playing back Midi files off floppy. Certainly in terms of operation this is very similar to playback of MP3's.

The good thing about MP3's (and backing tracks in general) is that you can use the full power of sampling and audio processing to create the track, inculding such luxuries as backing singers that are in tune!

The good thing about Midi files is that you can transpose / remix / mute / transpose on the fly. You can put the lyrics into the file (lifesaver for me with my otherwise chaotic filing system). Harmoniser capability can give you those backing singers to an extent (although I don't use this; one copy of my voice is more than enough)

I see it as a "horses for courses" situation. I use an arranger keyboard for it's flexibility in a live situation. Well produced MP3 can give quality results but less flexibility.