I personally had issues with the audio quality on MP3 Skype Recorder, though it seems I was the only one whose experience with it was not great.
We use iFree Recorder and the post-call quality is perfect. Just like with MP3 Skype Recorder, iFree records on left/right channels, so you'll have to process it through Audacity (or your preferred audio editor) to get it on full stereo.
Your mileage may vary, but there's another option for you.
The ideal solution is for each of you to record your narration locally. However, if you're willing to make some compromises on sound quality, you can use iFree Skype Recorder. It records in stereo with your voice on one channel and your friend's voice on the other, so you still have the capability to compress and EQ each of you separately.
I use iFree. It records the conversation in stereo - your voice on one channel, and everything else on the other. This means that you can then EQ and balance the two sides of the conversation independently.
The best solution is if your friend records their narration separately.
If you can't do that, then you could try iFree Skype Recorder. I used this once and it worked out fairly well - the result was a stereo MP3 with my narration on one channel, and my co-op partner's narration on the other. That allowed me to then process them independently.