I use mine via the 3.5mm cable. Just so you know, radio waves themselves are ridiculously lossy, stop trying to get a good sound off of that. Half the time they broadcast a 128kb mp3 or some such junk. As for the ipod, the headphone jack is the huge bottleneck there. If you want great sound from it, get your ipod connector plugged into a headamp to bypass the internal crap, then have the headamp connected via the RCA for the speakers. 3.5mm kidna blows unless you go really high quality.
EDIT: while we are on the subject though, I could also use some recommendations. My sources are 2 different laptops and I'm working mostly with flac files, if not 320kbps MP3 files. I also have a Nexus One for my portable device but I seldom plug that into anything, If anythign i'd be saving up a hundred bucks or so and getting me a 16gb sansa or some such player capable of digital output rather than spend another 100 bucks on a 32 gb microsd card and render my current 16 gig card useless. Not to mention, i'm on tmobile and my entire phone only has a life of another 2 years before all data gets shut down to it courtesy of AT&T.
I'm looking for some sort of DIY usb DAC solution that is linux compatible. anything plug and play will do nicely, its only when things get more complicated that linux ceases to have drivers available.
Edited by shrimants - 3/22/11 at 3:17pm