I was looking to expand on Mail's sound effects, so I got some new MP3 sounds, saved them in ~/Library/Sounds and tried to use them in Mail. Mail accepts them, and plays a sample.
Later I noticed that the sounds don't play, and all system sounds are "damaged." The only thing you hear is a loud and nasty noise for every sound if Mail is running.
I re-saved the MP3s in AIFF format, and removed the MP3s from Mail's sound listing ... and now everything works correctly again.
[robg adds: I haven't confirmed this one but thought it was worth a heads-up.]
Mac OS X Hints
http://hints.macworld.com/article.php?story=20031128154341399