The biggest problem with this is sound quality. Even with an FM modulator plugged into your antenna input in your car you get at best FM quality sound, not CD quality.

I always thought that the killer combo would be an in-dash docking statoin for your iPod or such. Basically get into the car, flip up a huge auxillary display (like the Empeg has) and it would reveal a slot that would fit a portable player. Slide the player in, then flip the aux display back down and you have all the advantages of a portable with those of a car player.

Disk space would probably be an issue for some, but hey, wait a few years and we won't have to worry about that even.

You could possibly manufacture it so it would be a standalone FM radio even without docking your portable.