I've been looking into this myself quite a bit, and here's the rundown:
In order of sound quality (and price), methods of connection
1) Direct hook up through aux input, by far highest sound quality but also the most expensive and requires the most know-how. Not to be mean, but if you don't know how to get your stereo out, you probably want to get this professionally done. You will probably also need to buy a charger depending on what kind of aux input you get, as the link below is one of a few I've seen.
http://www.logjamelectronics.com/soundauxtoy1.html
try above for aux input
2) FM Modulator, not as good sound quality wise, but very simple and cheaper than aux input. This will do for most people with stock equipment. One major benefit is they are wireless (most) so you can use them anywhere. Try to find one that also has a built in charger of some sort.
3) Tape- just as you said, there is a reason no one uses tapes anymore. However, one benefit is that you do have a direct connection to the radio, whereas the FM modulator will transmit wirelessly and some people (including myself with my xm radio) have signal issues. Tape is cheapest.
As far as head units go, here's the deal:
A few companies were making head units in the past couple of years that had aux input for mini stereo (ie. ipod cable) on the front face plate. Maybe a little ghetto, but it's also very easy and you still have access to your rear aux inputs/cd changer port to hardwire satelite radio or whatever else your heart desires. Now, all of the car electronic companies are doing away with the front port b/c they realized that if they did so then people would have to buy an auxillary input adaptor such as the one above to utilize their ipods. You have to remember, these companies still want you to buy their cd changers, so they're not planning on putting rca inputs on the back of their stereos anytime soon.
I'm personally have an aftermarket pioneer with a pioneer cd changer and xm transmitted via wireless fm modulator. I'm scrapping the changer (on ebay) and I'm going to do one of the following.
1) Buy an aux input adaptor for my pionaer, and couple that with this cool little toy to hook up both my ipod and my xm:
http://www.discountcarstereo.com/detail.aspx?ID=612
2) OR, yank out both my radio and cd changer, scrap on ebay and buy a head unit that has both front and back aux input capabilities. I haven't quite decided yet.
Hope this helped.
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