Also not Gonk, but...yes, the drop off in quality will be similar to that between CDs and an iPod on a good car audio system.

FWIW, my experience:

First, ran my ipod through a standard ipod dock (uses the ipod dac) and connected it through the RR2150 analog input. Not bad, but room for sound quality improvement, as well as no charging for the ipod.

Then, I got an HRT istreamer DAC. Sound quality definitely improved (my wife felt moved to say "wow"), and it charges the ipod. Still the HRT requires an external power source and is a bit flimsy feeling--you use the standard ipod connection cable to hook up the ipod, and the dock is not compatible. Also, no remote.

Currently, I use the Apple airport express connected via toslink to an inexpensive external DAC. This lets me stream all my digital music using my ipod as a remote. Also, any ipod with airplay can stream through the airport express. I am enjoying Pandora streamed from my ipod as I write.

If you require ipod access, the airport express plus a DAC with toslink input is a good option. Perhaps not "audiophile," but a clear audio improvement over the minijack input, and very functional and convenient.

Ken