Sound quality is said to be better than the standard VW unit, but you are right if you want 'the best' this may not fit the bill.
As for the IPOD connection, they are working on a rear connection at the moment, I agree, the from ipod connection is terrible, and the white cable you have to plug in is not aesthetically pleasing in the least!
However one new development is that it now has a USB in the rear, you can connect portable HD's and memory sticks.
It can run all Nav software that is for CE based system, but the best one seems to be IGO8 at the moment.