| Most people just put a handful of albums on, and don't load their entire collection. That's why the nano can get by with just 2/4GB of space. I had a friend with a 30GB iPod--she was using less than 1GB.
In my opinion, the iPod is best used as a portable music player. It's interface and everything were designed for that purpose. There's really no good solution for hooking it up to your car/home stereo yet. Of course, if you're going to be one of those people who only use 1GB of your space, the 5 album (or whatever) limitation of the BMW iPod adapter might work for you.
Personally, I just made a bunch of mp3 CD's that I play in the stock CD player. | 
