Let me just state for the record that if Apple were to release a car stereo head unit, I would be first in line to buy it. I would even replace my old, 2G iPod with a shiny new iPod at whatever price they asked. Steering wheel controls would be nice, but really all I need is a head unit with an iPod socket and nice controls. Let's call it the iDash.
The car/iPod interface has been the worst part of the iPod experience -- getting the iPod music playing out of the car speakers is ridiculously hard, and just finding a place to rest the iPod while it plays is comic. I've tried using cassette adapters, which fake out the tape deck into playing iPod tunes, but they have consistently died on me, either fraying at the cable that dangles out of the deck or frying in the heat (just like a real cassette!). I've tried using mini FM transmitters like the Griffin iTrip, but the sound quality is terrible and finding a free radio channel in the Bay Area is impossible. (I had one for a while, until some anti-enterprising San Franciscans launched a pirate radio station on it.) I've tried removing the CD changer and using an RCA adapter to wire the iPod in directly, which, modulo the cables trailing from the trunk to the front, was great for sound and stability -- until the damn thing shorted out and took the turn signals, gas gauge, and brake lights with it, a $600 repair. Now I'm back to the cassette adapter, and I pack it into my bag every day as I head out of the car. What a pain.
Too many head units don't provide auxiliary input, and all the solutions on the market are half-assed and clunky. A fantastic Apple head unit would be an amazing tool for the iPod, and would really change the car stereo experience.
Microsoft wasted a bunch of money on car PCs a few years ago. Wouldn't it be funny if the iDash gave Apple a entry point to automotive computing?