All of the new Ford vehicles with the Sync system do exactly what you are asking. My touch will link thru bluetooth to the Ford Edge and play anything in my music folder. It shows artist, song, etc..
Any of the Pioneer in dash units with bluetooth will do this also. I would assume other brands will as well but I don't have personal experience with them.
I use the cassette adaptor that came with my xm radio to feed into one of my vehicles, good sound, no info on the radio though.
I recently found that the MOTOROKR T505 - Motorola works very well. It is a Bluetooth Hands Free Speaker with a Wireless FM transmitter so audio from the connected phone will play through your car stereo. It is rechargeable and portable. Cost is around $50-$60 depending where you buy. I have been very impressed with the FM transmitter. I get no crackling, static, etc. For me, a charge will last a month or more. And best of all no more wires (that's my OCD talking)!