Further to your news article here about broadcasting from your Smartphone to your car stereo, I thought I'd comment about my experiences with this idea.
I had the same thoughts a month or two after buying my SPV C500 and went hunting on eBay for the bits. I bought the 2.5mm to 3.5mm adapter from ukbarsupplies for a couple of quid (couldn't be bothered to go to Maplins!) and a Belkin FM transmitter from a private seller - total cost was around £18 for the lot.
Plugged the adapter into my phone and plugged in my favourite mini-speakers - excellent MP3 stereo to take with me when I'm staying in a hotel somewhere. No extra MP3 player, no need to boot my laptop.
By adding the Belkin transmitter, I thought I'd have the perfect solution for the car too. Wrong. It's one of the "iPod-White" versions with a little slider switch on the bottom to shoose the FM frequency. I set it at 88.4 and gave it a whirl. The results were really disappointing. The volume was really low, even with the phone volume cranked right up. Dialing up the volume on the stereo to a level WAY over comfortable for normal radio caused distortion and hissing.
I plugged the transmitter into my Toshiba E740 PDA (running TomTom3) and got a really good sound through my car stereo - no distortion, volume at normal levels, no hissing. MP3's played on Media Player were great, even with the nice TomTom lady talking over the top!!
So, to summarise, C500 with adapter and mini-speakers was great. E740 with transmitter was great. C500 with transmitter was a bit crap!! I've tried all the settings on the phone and each of the different FM frequencies (all 4) but still don't get a good sound output.
One positive thing though is that the sound is so bad you don't hear the "click" every 18 seconds when playing MP3s on the C500.....