I built one myself.
about 3 years ago.
That was before Atom time, I used Via C7 mini-ITX mainboard, Pico-ATX automotive PSU and 4GB CF (with CF to SATA adapter).
The OS was kUbuntu 7.04, and I have quickly put together touch screen friendly front end for Amarok (via DCOP interface) in kommader (I am not a coder
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).
The most expensive part was 7" touch screen.
Here are the issues I ran into:
Touchscreen is a lot less convenient than real hardware knobs and buttons.
Glare is the killer, you will require to script or wire the "illum" wire to dim at night.
While sound quality was OK, but nothing compared to real hardware like Alpine head decks. It took great deal of taking care of ground loops.
Need of a pointing device and keyboard for debugging (since I have built everything myself)
Even with mini-ITX you will find a bit of problem with space.
I compiled a custom kernel to make the thing hard boot in under 20 seconds.
Even if the PC sleeping it can drain your battery in few days, it needs to shutdown (or hibernate) after prolonged off times.
Because I used CF I could not hibernate (not enough disk space). This was before affordable SSDs (now 40Gb intel SSD is ~$145, then for that money all I could afford is 4Gb CF).
Particular motherboard I used had stability issues.
Eventually I scrapped it and got a real head unit. In hindsight, for $1500, I could have gotten an awesome headunit.
EDIT: add another $50 to the price of the pocket pc and you can buy a decent head unit with USB.