Aggie, how many frequency options does your transmitter have? I have one that I got at Cdn Tire a couple of years ago (it too was $10), and it has 5 frequencies but they're all close together. Since most radio stations have a plus or minus .2, this can cause interferrance with my iPod. I usually only use it in the car when I'm travelling (stick with radio while in town), and there have been a couple of times when I've been stuck with some cruddy radio station for 20-30 km until I get out that particular broadcast range. Especially since, if I'm alone in the car, it isn't really safe to be mucking with the setting on the transmitter while driving 100 kph!
I ended up getting another little gizmo -- a mini dock/speaker that sits in my cupholder and is powered by my cigarette lighter. The sound quality isn't as good as the car stereo though, obviously.
Not that I'm looking at investing a lot more $$ right now -- it will be only a few years before I have to replace this car, and iPod docks are close to a standard feature now in new vehicles.