The problem is not the connectivity, it's that you have to own an iPod.
Personally I have a 4GB USB stick in my armrest compartment that connects to the audio-in jack which feeds the head unit. Then I have a decent MP3 player for all other circumstances.
iPod-in-car is lame not only because iPods are gash, but also because you can't just leave it in your car and forget about it, because you have to take it out for the gym, train, etc.
An iPod is ideal for the job. My iPod Classic lives in my car, only removed to sync with iTunes. I use my iPhone when I'm out and about.