Yep. Only mp3 and wav are supported.. I recommend mp3 because it is a smaller file size therefore you can upload longer pieces of music/audio. Scratch's limit for sound file sizes is 10MB (I think?) so you can upload files up to a certain length before the limit becomes a problem. With .mp3, it can take slightly longer, but because the file is smaller, you can upload longer length pieces of sound. .mp3 and .wav audio files. When you upload an .mp3 it will convert to .wav.
Hope I helped!