The new phone – Chocolate – made by South Korean company LG Electronics, plays songs encoded in the MP3 format as well as songs digitized in Verizon’s format of choice, Microsoft’s WMA.

By selling an MP3-capable phone, Verizon hopes to undo the bad publicity it experienced earlier this year when a V Cast software upgrade disabled the MP3 mode on two V Cast-compatible phones, even though users could still convert the MP3s to WMA files.

Verizon is charging $150 for the phone, which is bundled with a two-year contract. Additional memory in the shape of a 2-gig storage card will cost an additional $100.

While Verizon is dumping the monthly fee, it is still charging $1.99 per song. Unlike iTunes’ 99-cent songs, Verizon’s songs may be downloaded twice: once to the phone, and once to a computer. Users can also transfer their existing MP3s to the Chocolate.

Sales of player / phone combos are expected to take off as more people upgrade their old handsets in favor of the newer phones. However, one of the questions facing consumers is whether they want to use one of the new phones in addition to, or in place of, a personal player. Today’s music phones don’t have anywhere near the storage capacity of most hard drive-based personal players.

However, unlike iPods and their ilk, you don’t need a computer to download a tune. Instead, all you need is a phone. And, if you’re a Verizon Wireless V Cast subscriber, a couple of bucks.