I can only see two things possibly gaining traction in the retail market.
1. Apple releases their own head unit that interfaces with an ipod (the ipod would plug into it like a cassette in an old deck and the headunit would provide the display)
2. A universal product is made in the form of a wide screen display and input unit. This would be attached to the car in addition to the existing head unit and would interface with an ipod and/or other popular players. It provides it own "Really Great" UI and could be implemented to do it own decoding (thereby the connected unit it nothing but storage) or it uses passthrough and the connected unit does all the decoding.
If anyone but Apple releases a head unit, it won't really make it big at retail. The small volumes may be enough for someone like Clarion, Alpine, etc.. to support. At thi time however, I don't even know of any stand-alone head unit with a display that doesn't look/feel/act like it's 15 or 20 years old.
#2 wouldn't be that different from the state of affairs with add-on GPS units. Currently I have yet to see a decent display and user interface for connecting an ipod or other portable DAP in-car.
The non-retail opportunities are obvious - create a better UI for the stuff that comes in the car already. Maybe one day someone will do it like #1