If you go with an aux-in option, then the Nano will connect as well as any other iPod. But if the connection device uses both top connection ports of a regular iPod then it won't work with the Nano.
To be honest, though the Nano is a nice little iPod (and I just bought one for my wife), if you're looking for something you're going to be using every day in your car I'd get the 20g "regular" iPod. It holds 5x the music and still displays pictures on the nice color screen. You get more for your money with the larger one, much more. But if you're music collection isn't very big, or you really need something that's ultra-portable, then get the Nano.