What should you use? We've looked at several different programs and tried about half a dozen. For playing MP3's, there's just nothing as good as the standard: WinAmp. But, not the latest version. The 3.X version is a little on the bloated side and it doesn't support the hundreds of add ons that work only with the 2.X version of WinAmp. And it's still free.
We use version 2.91 (from http://classic.winamp.com/). We use it with RockSteady DSP plug in (a great little plug in that equalizes the volume, both up and down, giving your station a very nice sound.. not too loud, not too soft). Just search for RockSteady on the website and download it. We use the 'harder' compression setting (middle setting).
For streaming, we found a very cool little application called SimpleCast from Spacial Audio. It costs $49 and it's rock solid. It also supports MP3 Pro (a new format that makes a 64kb stream sound more like 96kb,, some say 128kb). Be sure to get the MP3Pro plug in for WinAmp 2.91 (searh on MP3Pro on the WinAmp site). It works with the streaming standard software- ShoutCast (also from the WinAmp folks- http://www.shoutcast.com/). You can download ShoutCast from the Winamp site (free), and SimpleCast from http://www.spacialaudio.com/downloads/index.html (the Sapcial Audio site.. a couple of guys down in Texas writing some great software for radio stations).
We also use a hunk o iron (hardware) that's both cheap and very powerful. It's the Behringer DSP 9024 Ultradyne. It's not exactly simple, but if you really want to shape the sound of your station (on air or via stream onto the internet) this puppy does it all. You can buy it for around $200 all over the internet (we paid $189 at musican's friend online).
If you have any questions about setup, drop us an email at TECH@KBFR.ORG