I am VERY happy to report, that my iPhone 3G plays beautifully, without noise, after the 4.2 update. Thank you so much Apple!
For those of you still having issues with your stereos not recognizing the phone, try a hard restart.
I have a Pioneer AVH-P3200DVD, and if the head unit can not see the music files in my phone, it acts as if it doesn't recognize the phone at all.
After the 4.2 update, for whatever reason, I could not view anything iPod content on my phone until after a hard restart. The stereo was not recognizing the phone and I was losing my mind.
Hard restart, stereo sees the phone, and CRYSTAL CLEAR AUDIO!
Now, if Apple could just make a Wi-Fi card that didn't crap out after a few months I would be very happy.