I looked into this too a while ago and thought about the built in DVD Sat Nav option. Decent models (Alpine etc) are well over £1000, and the LG I saw advertised (about £600) was not recommended. The local halfords stopped stocking them due to the problems they had with them. Replacements map discs can also be expensive.

I decided to go the route you're thinking of. A replacement head unit and a standalone sat nav.

I ended up with a TomTom 920, this also happens to have bluetooth and MP3 capability built in; you can get away without the wires for a couple of hours if you charge it up before you go out. I'm not sure that's true of all sat navs though. You can also get a mount this fits onto the centre heater vent.

FWIW, I got an N95 when they first came out. I didn't work as a phone so I took it back to the shop. I would have got a replacement but by then I had done some research. The battery life was terrible, the GPS took an age to lock on and the phone was like a brick to carry around. The black ones are an improved model so I guess some of these problems have been addressed.