They don't work either way. FM transmitters are complete garbage

 

Any of the iPod ones work with the iPhone, but you cannot charge the iPhone 3G since the pins were changed.

 

i was searching for this aswell...what i come up with was...

1. FM Transmitter (really bad quality)
2. FM Modulator
- hardwired signal to the radio, quality is pretty much compareable to a clear radio station. this is pretty much your best bet since its quite cheap <50$ and its fairly easy to install. You won't have your ipod charged so you would need a DC Charger in the car...if your using an iphone then you should be okay since most people charge their phones at night right?
3. Alpine headunit + PAC SWI-JACK($50) <----pretty much the best but if its out of your budget then go with fm modulator

 

Save some money and buy and new radio(alpine IDA X-100 ftw), it is not worth the trouble, believe me you want full function from your IPOD and any adapter current in market will fall short of this objective my $0.02

 

I bought an iPod hook-up for the stock AP1 stereo at Best Buy. Took about 5 minutes to hook up. It charges your iPod while it' hooked up and you can use your dash controls for it. It just plugs into your CD changer port on the back of the stereo.