I've been considering something like this, but I don't want to spend the money or hack up my car, so I haven't fully researched it.
What I was considering is a CD player delete, and a screen relocation. If you look around a bit there was a guy with an S40 or V50 that did the relocate and built a car pc. He did this with fiber optic cable and moved it up to the panel covering his sunroof motor access.
From there I was thinking of using a product JL Audio makes called "cleansweep". It basically allows you to install a module in line after your audio out, which has hookups and preouts for auxilliary ports, subs, etc. I thought that this product would allow me to retain use of my volume knob and buttons on my steering wheel, but apparently I'm wrong. That's another thing that made me drop the idea.
Then I was going to see if there was something out there that was basically a nav/video screen that allowed me to still have my own music via flash card/ipod. I'd have to hack up my waterfall though, because as mentioned there is not enough room there.
If I ever do anything, I want to still retain stock functionality. It seems dumb to me to have buttons that just don't work because I decided the audio isn't good enough (which it isn't, but I'm willing to live with it for now).
here's a really old thread that might help you: http://forums.swedespeed.com/zerothread?id=48581
Hope that helps you out a bit... It's a lot of work and money just to have nav, but there are other things you can do with it if you wanted to.