I have the 80gb classic and also no problems. Will play on playlists 8 & 9, but I tend to use the Honda1-6 playlists.
Never had any problems with previous firmware either (have had a few problems with ipod out of car, but thats another topic entirely!)
About the cost- it may be £225 + £160 for the ipod, but this is still ~£200 cheaper than the factory auto changer and holds alot more music than even 8 MP3 disks. Oh and you can use it out of the car

. So expensive, maybe, but relatively cheap compared to stealers (of all marques) auto changers.