I'm cross-posting this between the IOpener Tech and WebSurfer Tech forums because people are using both WSP's and IO's in their cars, and I've seen lots of postings about FM transmitters in both groups, so don't flame me. Also, to keep down on confusion, it would probably be best to restrict replies to just 1 of the postings. How 'bout IOpener Tech Stuff, since that gets more traffic.
Several people have made mention that FM transmitters are a poor way to get sound into your stereo system, and for the most part they're right. If you've got aux or preamp inputs, use 'em! Many of us don't, though, and tape adapters have generally poor sound quality, too. The main problem with the transmitters is that they tend to drift, and you have to retune them constantly, especially if you have a radio with digital tuning. The best way to overcome this is to use a transmitter that also has digital tuning.
For those who don't have an electronics background, PLL (Phase-Locked Loop) tuning is basically controlled by a microprocessor and a digital feedback loop. This is how digital FM recievers work, and to reliably transmit to a PLL-controlled radio you really need a PLL-controlled transmitter. You might be able to get away with a VCO-based (Voltage-Controlled Oscillator) unit if you tune it carefully. A VCO uses an analog feedback loop to maintain a steady frequency with little drift, though it still has to be tuned to that frequency to begin with. With a PLL-based transmitter you just need to set some switches.
The best deal I've found is a PLL-controlled kit from DC Electronics for around $60. Unfortunately, their website (http://www.dckits.com) seems to be down right now, so I can't confirm the price. Also, according to a cached copy of their main page that I did manage to find, they have a new VCO-based transmitter, which is even supposed to be tailored specifically for PC soundcards and portable music (read: MP3 ;) players, though I'm not sure quite how. I also don't know what the price is.
CPEQ also has a $60 transmitter (http://www.cpeq.com/zxmit.html) which claims to be "low-drift," but they don't explain the basis for the claim. I think this is another VCO kit (if it's PLL it should've said "no drift" ;).
These kits can also be purchased fully assembled for a premium. Or, be a real hacker and buy the schematic (I think DC Electronics at least used to sell a book of schematics for all their kits) and parts and make it from scratch yourself. That's how I used to do it... :)
Good luck! If anyone has any (good) experience with any of these or any other reasonably low-cost transmitters, please add to the thread. I'll probably be either getting the schematic or, to save time, the whole PLL kit from DC and I'll post here with results.