Individual ipods. That way, there's no fighting over what to watch and it keeps the little buggers occupied in other places (outside the car), as well ...
I was thinking that also. I am not huge on having some shop hack up the electronics. Not that all are bad but hard to find a good one.
Never mind that as soon as you spend $5k on adding a beautifully installed headrest dvd system it will be hopelessly outdated (in your kid's minds anyway) and they'll be clamoring for the broadband mobile satellite movie download service to their mega-gazillion gigabyte subcutaneous-scalp retinal-nerve-tap flash e-prom systems.