Check out this thread and see my reply:
NEO iON iPod connection for Vettes
This setup is expensive but seems to be the best solution out there for C5s (using the factory head unit). The FM modulator's are convenient but they simply can't match direct cabling for sound quality. And with FM modulation, you have no way to control the iPod from the head unit which is the primary reason for me to go the route that I took...
I haven't decided where to try and tuck all of the excess cabling but after reading another thread regarding this subject, I may try and tuck all of it under the carpeting next to the passenger side footwell (forward of the passenger door).
I'd like to leave my iPod in the glove box and then use one of these to hold the iPod while driving (to make better use of that crappy "cup holder"):
Belkin iPod holder
I plan to check this holder out sometime this week as well as look into getting a case for the iPod; damn thing scratches too easily and prone to collecting finger prints!
Good luck...