So I know an update with the iphone 3.0 was the bluetooth. If I get a car stereo with hd2p or whatever bluetooth will it be able to stream audio to my car radio.
is it true that quality gets a bit worse? or is that not a problem?
How much worse. Would it be better than a fm tranmitter?
Better than an FM transmitter. Not as good as hardwired.
Some notes on A2DP:
The receiver (headphones, car stereo, whatever) can support various codecs - AAC and MP3 are popular, with anything unsupported getting transcoded to... something else on the fly.
So if you're playing a supported file within the supported bitrate range, the file will be streamed exactly as it is to your receiver. No loss whatsoever.
Cheap kit might not support much at all, so you'll be transcoding more often than not, but more modern/expensive kit generally supports a decent range of AAC and MP3. Even so, if you feed it a 320kbps AAC, or an Apple Lossless file it'll end up transcoding so you will lose quality there.
But yeah, for most 128kbps-256kbps AAC/MP3 music libraries there will be no loss of quality whatsoever. It may even sound better than being hard-wired, since a car stereo's dedicated audio hardware will likely do a better job with the file than the iPhone.
In my experience with a Sony head unit and Sony wireless headphones there's no perceptible loss of quality, and even the 3G can scrub through most tracks as smooth as anything while they play. The 3GS is better at keeping its cool while wifi is active, mind you, with the 3G often stuttering a little if it's trying to do network I/O at the same time. This is because the wifi and bluetooth are handled by the same chip.
so this radio will work?
http://www.crutchfield.com/p_070XHD7714/Dual-XHD7714.html?tp=5684&tab=detailed_info