Don't point the microphone directly into the mouth but keep it as close as possible. Use your hand to feel in front of the mouth how far you can feel the air from your mouth goes. Just at the periphery of this, usually either left or right of your mouth, is the best place to position the microphone.
Background Noise Removal
I use Audacity because its free and lets me use someone else's computer to edit. It has a noise removal filter that works great for removing background hum.
WAV is the way to go when integrating with Sony Vegas. It saves on the hiccup and loss from using MP3s. The projects themselves I keep in AUP for when I need to go back and redo a portion of the voice over.