I've been looking to do this for a while but haven't got around to it. If you only want to add MP3 then just get a new head unit or buy an iPod to plug in through an Aux port.
However, if you want to get really fancy then a PC is ideal. You can add GPS, DVD, Divx, Bluetooth(hands free for your phone), remote storage for your digital camera if you're out and about, etc. Basically there's loads of different options that don't cost a lot once the PC is built and in the car.
For the cost of the cheapest GPS head units(~?700) you could build a PC with a 7" touchscreen and then add lots of fancy gadgets. Definitely check out
www.mp3car.com like someone else said because those guys know lots about this stuff. Also try
www.cartft.com as well, they're based in Germany(I think) but the guy who runs it is really helpful.