Nearly five years into the iPod revolution, there remains no iPod/car integration that provides a complete experience. For many people, the only option is to use an FM transmitter. Others can choose to play their iPods through a tape player adapter. On many newer cars, an auxillary input jack allows for the audio to flow directly to the car’s stereo system. Some luxury cars offer iPod kits which treat iPods like an external CD changer.
All of these methods have their tradeoffs. All require that you look at the screen on your iPod to get basic information about what you’re listening to. None provide an ideal consumer experience.
Here’s what I’d like to see: a head unit that allows you to insert an iPod, in the same way you’d insert a cassette tape into a tape player. The head unit would act as a dock for the iPod. It could be equipped with a flipdown face, like many in-car CD players.
The head unit should provide the following capabilities:
- Get music from the iPod to the stereo system
- Keep the iPod charged
- Display track/title/artist information on the system’s display
- Provide full access to the iPod’s playlists and browse capabilities
- Provide full access to fast fwd/rewind from the car’s controls
- Integrate with the car’s steering wheel controls
Rakesh Agrawal's blog 
Based on the rate at which Apple creates new form factors for the ipod, i wonder if you’d be able to create a head unit that is adaptable enough to accomodate ipods that [could be] several generations away?
I think that if you were able to get enough of an installed base of car docks, Apple would continue to manufacture iPods that fit dock. (Or there’d be a heck of a secondary market on eBay for those that work with the car docks.)
Apple already has a universal dock adapter for the many dockable aftermarket devices.
As another option (thoough one I think is less elegant), you could provide the functionality described above but have the iPod dock connector sit in the glove compartment or console so that form factor is not an issue.