my car setup is ONLY an mp3 one. its about 7 yrs old and I built it with what was good, at the time. I have no head unit, per se, and only an mp3 embedded-system player (neo35, if anyone remembers that) in the trunk and a long analog+control cable running up front. there, we installed the lcd/button remote and the line-out goes into an analog line-driver that sends the analog signal back to the trunk where the amps are. I used balanced line drivers on all 'long runs' and was careful with grounding and power feeds (keeping the power lines separate from audio lines).
I have no cd player, no radio, no nuthin' - just that remote disk player and mp3 hardware based decoder. and it sounds great, I think.
today, I'd 'ship' spdif around the car if I had to do things like this. run digital cables along the trunk-to-front runs (etc). only do d/a conversion just before the amp rack (physically). that way you can avoid having to worry about balanced lines or even running hot line levels (if your dac is clamped right onto the amp or amps, any cable will work fine).
if your head unit has a 'walkman input' right there at the head unit and you are planning on having a small cable from your pocket sized mp3 player to that head unit, that should work just fine, as well. if you can't get enough volume from the mp3 player, you -may- need another amp (preamp/booster) stage. one of those 'line drivers' that I mentioned would work in that case, but see if you can get by without that middle amp stage between your player and head unit. if you have external amps, you may be able to turn their gain up to help.