Ok, I was able to make it work from a fresh maverick installed. I
enabled the 'multiverse' software source and installed both packages in
this manner:

$ sudo apt-get install libavcodec-extra-52 vlc

Then I opened VLC and did "File > Convert/Save". I was able to convert a
wav to mp3 as expected.

I have added my finding to the following page:
https://help.ubuntu.com/community/RestrictedFormats/MP3

Thank you all (and xtophe on IRC) for all your help in identifying the
steps needed to have this feature work properly.

** Changed in: vlc (Ubuntu)
       Status: Confirmed => Fix Released

-- 
vlc fails to properly convert movie to mp3
https://bugs.launchpad.net/bugs/550599
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