We have started by simply connecting the customers Ipod directly to the stock radio using a USA SPEC DF-TOY. It is a very handy interface that accepts RCA line level inputs and converts it into a factory wiring harness which plugs directly to the back of the radio. Also, we used a Belkin adapter that connects directly to the Ipod charging it and providing the audio output. The setup is very clean, functional, and most of all sounds a great deal better than utilizing an FM modulator.
Also, see a write up at the Scion Life Forums: http://www.scionlife.com/forums/viewtopic.php?t=75729 .