Mine's wired in my car through my 1/8" in on the front of my HU. I don't use it in any other car though.
I have heard my friends iPod with the itrip, and it sounded really good. Not as good as if you wired it directly in, but if you don't have an expensive stereo setup, and you get a fair bit of road noise in your car, you probably won't notice it much. It also will depend on how many radio stations you have in your area.
If I were you, I would spring for the biggest iPod I could afford. I have the 40gb, and I am out of space.