I have both, the cassette player adapter that I had a while ago for a portable CD player, capable of dealing with MP3s, and a Belkin FM transmitter. I prefer the FM transmitter for less clutter and also bearing in mind the fact that most newer car radios have only CD players.

Of course, there is one down side to the transmitter; it is deliberately made to put out a very weak signal so you do need to keep the iPod near the dash board or close by... in a large car from the rear seat, you may experience poorer signal. But that would also depend on the car; in one of my cars the antenna is in the rear wind shield and in that case we have no problem regardless of iPod's location.

I can't remember the subtle difference in quality between the two.... it has been quite a while since I used the tape adapter. Additionally, I was more focussed on an uninterrupted reception when I was checking the two and in that respect, a wired tape adapter has no problem but since I do not usually drive around a heavily populated FM-signal rich metropolitan area, the FM reception seems to be fine for my use.

In fact, with CDs costing next to nothing, I tend to keep duplicate burned CDs in the CD changer of my car that holds half a dozen of them and a few spare cartridges full of more CDs. I know this is not what you are interested but for me it is more of practical solution that keeps my rather pricey iPod out of the sight and harm's way. At least for me, the FM transmitter proved one of those curious, would be nice to have trinket that really isn't all that essential, lately I seem to use it less frequently... (perhaps, more of what you didn't want to hear... ).