What sort of Home Cinema set up do you have? I'll let you know some of my recent findings which hopefully you'll find very relevant and useful. Not so long ago I bought a GQ24 cable to connect up my iPod to my old Yamaha receiver, and was very impressed with the results, a more open sound than my CD player in the same system, but maybe not quite as much detail. I have recently upgraded to a Marantz sr6004 which has built in iPod connectivity through a front USB port, as well as bluetooth connectivity. Over the past few weeks I have conducted several listening tests using CD, GQ24, USB & iPhone through bluetooth. I certainly believe CD is best, as it delivers more detail from the music, and a better defined sound stage, but it's obviously not as convenient as iPod based music. The difference between the GQ24, USB & bluetooth was surprisingly little, with USB coming out marginally best over the GQ24 and then bluetooth. The GQ cable gives the music a different tone, I would say more neutral, and obviously some people may prefer that. Bluetooth, however, is deffinitely the most convenient source for me, as I can sit in my Lay Z Boy and play whatever I like, from either my laptop or my iPhone. However, if these connections aren't available to you, I would highly recommended the GQ24, as would my friend who's borrowed it from me for the last 2 weeks! It's very comparable to a budget CD player, and far cheaper. If you go down the Onkyo dock route, it will only be using the DAC in your receiver, and is therefore quite an expensive way of connecting your iPod. Sorry to ramble on, but I would just like to add that you can use the GQ24 cable with the Universal Apple Dock, which then gives you control via a remote.
Hope this has been of some help.