I have an iPod mini and I can also hear the hissing on quiet songs. Try turning the sound down on the iPod and turning up the radio volume, this has helped a little. Also, are you running the sound from the headphone jack? From what I understand, there is an attachment that goes into the bottom of the iPod allowing you to access the sound that way (as a dock would) and the sound is supposed to be better. I have not confirmed this though.

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2006 X3 Sport (everyday)
2005 Porsche Boxster (weekends/stress relief)
2005 Acura MDX (hers)