There are several threads on the subject of iPod installation floating around
I'm using this iPod adapter in my 04 Z:
mp3yourcar.com
It's somewhat expensive (cost me $189.95 for the adapter and another $40.00 for the CD-changer harness) plus the iPod. But with this setup, your iPod will connect directly into your factory head unit (you simply select Aux on your head unit to listen to the iPod); your iPod will receive power from your car system allowing your iPod's battery to remain fully charged, you will be able to control volume and FF/RWD to/from the next track from your factory head unit. When you power off your factory head unit, the iPod will also power off...
The installation is very simple (on a scale of 1-10, I rate it a 5, all plug-n-play if you use the CD-changer harness

).