Just had the official Lexus ipod integration kit installed on my '07 400h. Paid 200 GBP for the device and the install (they came to me)
Basically the kit provides a neat dock in your glove box that the ipod clips into along with the ipod connector which is wired into the stereo. The ipod shows up as an external CD-changer. Pressing disc twice engages the external i-pod.
The down side is that Lexus has not been able to get the system to read any of the text info from the ipod (strange since I believe the VAIS kit does give you this functionality). You're basically limited to choosing tracks from your first 6 play lists. Each playlist shows up as a seperate CD (#1 to 6) and then you can navigate between tracks on each CD and these are listed as #1, #2, etc... . You do not have the option to search by artist, or song etc... You can play songs randomly across the play lists though this is driven by the lexus stereo and not the ipod shuffle so the time between songs is much longer then it would be.
A definite improvement over an fm transmitter in terms of sound quality but not the full integration I would have hoped for.
I haven't had a chance to put it through its paces since I'm still at work and had it installed during lunch. If I have any more relevant info. I'll post it here. Any questions let me know.