Found the answer...
The standard audio system, featuring 13 speakers and a 6-CD autochanger, will play MP3 and WMA files. The system also includes an auxiliary socket (installed in the console box) to enable a portable audio player to be plugged directly into the system. For customers wanting the best in the segment, Lexus offers a premium, 14 speaker, Mark Levinson® surround sound system. This unit can also be specified with an in-dash 6-disc DVD player.
see http://www.is300.net/forums/showthread.php?p=3272151 for the official Lexus IS Press Release.