I use a both a 3rd and 4th gen 40GB ipod in my car, I have had no volume issues at all, the volume seems about the same between radio, CD and ipod. I do set itunes to keep volume the same. I do get some funny background sounds on quiet tracks but assumed they were compression artefacts.
Occasionally (usually) when i get in the car an switch on I cannot get the ipod to play until I turn the stereo on and off but otherwise it works perfectly!
Hope this helps
